Question

Franco's Pizzeria sells slices of pizza for $2.00. According to the market demand schedule and assuming certeris paribus, what happens when Franco's raises the price to $2.50 a slice?

Answer 1

* The quantity demanded falls from 150 a day to 100 a day

Answer 2

The market demand schedule is a function that represents the relationship between the price and the quantity demanded of a certain good. It contains information about the preferences of consumers and about their budgets.

According to the law of demand, the relationship between price and quantity demanded is inverse, therefore when the market price of a product increases its quantity demanded decreases.

The demand of pizza slices is expected to decrease after the price rise.