6 What is the law of demand? How is it explained? What can cause a change in dem

Question

6 What is the law of demand? How is it explained? What can cause a change in demand? A change in quantity demanded? 7. How does one derive a market demand curve? What assumption(s) does one use to do so? Exercise: Market for Toasty Salted Tortilla Chips in Keene, New Hampshire What will happen to Demand in this market as a result of each of the following events ( fanything) and why Relate each event to a Determinant of Demand I) Keene State College students begin arriving for the fall semester 2) The prices of other brands of chips decrease 3) The price of salsa and black bean dips increase 4) It's Superbowl Weekend 5) A major medical report is released stating that too much salt in the diet causes impotence in men 6) An income tax cut is enacted, and most people's paychecks are now higher (assume this product is a normal good) 7) Three companies release competing brands of chips 8) High-class area restaurants begin serving Toasty brand chips exclusively 9) The public tires of Mexican food and restaurants, and flock to new Thai and Indian restaurants instead. 10) A major new housing development is built in Keene 11) The oil used to bake Toasty chips is discovered to help with 'memory and vitality. 12) The price of Corona Beer increases

Explanation / Answer

1) Since Keene college students begin arriving, the demand for salted Tortilla chips increases. As the number of students in Keene increase coupled with the point that college students are more likely to consume chips.

2) The demand for Tortilla chips will decline when the price of other brand of chips decreases. The other brand of chips are close substitutes and therefore individuals will prefer lower cost chips to the one with a relatively higher cost.

3) The demand for Tortilla chips will decline when the price of salsa and bean dips increases. The reason is that chips and salsa arre complementary goods. Since salsa and bean dips are consumed along with Tortilla chips, the overall cost increases and demand declines.

4) With the superbowl weekend, the demand for Tortilla Chips is likely to increase. The reason is that individuals will watch superbowl live or on TV and in both cases, such events are associated with an increase in consumption of chips and beer.

5) Since its salted Tortilla Chips, the demand will decline among men as salt is reported to cause impotency and that will make men stay away from Tortilla chips on a relative basis.

6) Since Tortilla chips is a normal good, an increase in disposable income will translate into an increase in demand and consumption.

7) With three companies releasing competing brand of chips, the demand for Tortilla chips will decline as these brands are close substitutes and the market competition increases. The new brands are likely to capture a part of the market share.

8) The demand is likely to decline on a relative basis as some individuals will prefer the toasty brand chips, which is being served exclusively.

9) With preference of Thai and Indian food, the demand for Tortilla chips will decline as taste preferances change.

10) The demand for Tortilla chips will increase. A new "major" housing development would imply increase in number of individuals in Keene and this will translate into demand increase as there is a probability of liking for Tortilla chips in the new population coming from the housing development.

11) With the oil believed to increase "memory and vitality" there will be an increase in demand for Tortilla chips as consumers derive extra benefit from consumption other than the taste factor.

12) The demand for Tortilla chips will decline as price of beer increases. Since beer is a complementary product in as compared to Tortilla chips.

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