The Juice Shop sells iced soft drinks. Management has found that demand is estimated by the equation: Q = 1,000 - 240P + 80PC, where Q denotes the number of drinks sold per day, P is the drink's price, and PC is the price of drinks at a nearby café.
(a) How many drinks will be sold if P = $1.50 and P_C = $1.20?
(b) Write down the equation for the firm’s demand curve for P_C = $1.20.
(c) If the other café’s price increases to $1.50, what is the effect on Juice Shop’s demand curve?

Question

Quizplus · Accepted Answer

The Answer of The Juice Shop sells iced soft drinks. Management has found that demand is estimated by the equation: Q = 1,000 - 240P + 80PC, where Q denotes the number of drinks sold per day, P is the drink's price, and PC is the price of drinks at a nearby café. (a) How many drinks will be sold if P = $1.50 and P_C = $1.20? (b) Write down the equation for the firm’s demand curve for P_C = $1.20. (c) If the other café’s price increases to $1.50, what is the effect on Juice Shop’s demand curve?

The Juice Shop Sells Iced Soft Drinks