Chapter 7, Problem 22AA

1)

To determine

To evaluate: the effect on the market demand curve for pizza when there is an increase in everyone’s pay.

Explanation of Solution

The effect of revenue is a rise in the demand for a goods or service triggered by a shift in the purchasing power of a customer is due to the flexible in real income Demand would increase since more people could afford to buy pizza.

When there is an increase in pay for everyone; the market for pizza is expecting to increase. If sales went up, then it could buy more pizza even though pizza prices went up.

Economics Concept Introduction

Introduction: The business demand curve is a list of all the demand curves in a given industry. This reveals the quantity that individuals desire of the good at different prices.

2)

To determine

To evaluate: the effect on the market demand curve for pizza with a successful pizza advertising campaign.

Explanation of Solution

Advertising helps a company make money by attracting more consumers to have knowledge about the goods and services, which contributes to increased sales. On the other side, if the goods are not promoted, the clients will never know whether the products and services are available in the market or not. Therefore, the market for pizza would increase as more people became aware of pizza due to the popularity of ads.

Economics Concept Introduction

Introduction: Advertising is a marketing strategy where advertiser is paid to advertise a product or service. The direct promotional messages are called ads, or brief announcements. The aim of advertisement is to attract people who are most likely to purchase the goods or services of a business, and to persuade them to purchase.

3)

To determine

To evaluate: the effect on the market demand curve for pizza with a fall in the price of hamburgers.

Explanation of Solution

Many variables that can be the reason for the fall in a price of a particular product includes income, taste and preference, substitutions of goods, increase in price etc.

In case there is a fall in price of hamburgers, the demand for pizza would decrease since people would choose to prefer more hamburgers.

Economics Concept Introduction

Introduction: Substitution effect states that if the price of a product rises, consumers will shift their demand to the substitute products. If a product's price increases, demand for the same commodity decreases.

4)

To determine

To evaluate: the effect of market demand curve for pizza when there are new people moving into the community.

Explanation of Solution

Population and the income influence the demand as when people have more money they will be induced to invest, and the more they will buy. The actual population changes demand simply because more units will be purchased as there are more people. So, Demand would increase as more consumers would buy pizza.

Economics Concept Introduction

Introduction: Changes in the demand curve are demonstrated by a shift to the right side. This may be caused by a numbers of reasons, including an increase in sales, an increase in a substitute’s price, or a decline in a supplement’s price.