The demand curve is at a downward grade. This happens for a few reasons. One, is the changeis in price, as the price lowers more of the cookbooks are demanded. The change in price causesthe consumer to substitute a cheaper product in place of another. Also, when there are morecookbooks for consumers to choose from they switch causing a substitution effect. Two, as theprice of the cookbook decreases it becomes cheaper for the consumer giving them the ability tobuy more of the cookbooks because their buying power increases; also known as the incomeeffect. Three, the higher price of the cookbook at $35 (the highest price) will result in fewerconsumers purchasing the cookbook until the price falls giving way to more consumers being ableto afford the cookbook. Therefore, when the price of the cookbooks decreases more consumersenter the market to buy the product. Consequently, this also causes a rise in market demand andthe downward slope of the demand curve. With the shift in income and the amount of consumerspurchasing the product the cookbook is considered a normal good. A good is a normal good whendemand increases following a rise in income and decreases following a fall in income (Hubbard,pg. 73).The elasticity of the cookbooks changes with the reaction of consumers per price. The elasticitycan be inelastic or elastic. The formula for Elasticity of demand is E (D) = % change in quantitydemanded / % change in price (Weisenseel, 2013) When figuring th ...
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