Figure 3-B
-Refer to Figure 3-B.Two donut chains in your town are battling for customers.The manager of the Yum Yum Donut Shop, facing demand curve D₁, has changed donut prices from P₀ to P₁.As a result, customers:

Question

Figure 3-B

-Refer to Figure 3-B.Two donut chains in your town are battling for customers.The manager of the Yum Yum Donut Shop, facing demand curve D₁, has changed donut prices from P₀ to P₁.As a result, customers:

Quizplus · Accepted Answer

According to the law of demand, when the price of a good increases, the quantity demanded decreases. Therefore, when the manager of Yum Yum Donut Shop increases the prices of donuts from P₀ to P₁, customers are expected to decrease their purchases. However, the demand curve D₁ shows that for every price level, there is a higher quantity demanded compared to the original demand curve D₀. Therefore, the change in price by the manager of Yum Yum Donut Shop will result in an increase in purchases at Yum Yum to Q₁.

Figure 3-B -Refer to Figure 3-B.Two Donut Chains in Your Town Are