Demand

Demand Quiz-

1) Bernie's would sell more hamburgers at $1 rather than $5, because people may be more willing to buy it at a cheaper price. Based on demand, many variables and factors inadvertently goes through consumers heads when they are purchasing. The hamburger may not be that great of a hamburger, Bernie's could be a low end, fast food restaurant and people may not be willing to spend $4 more dollars for a low quality hamburger. Also you have to think about the people that would be eating at a place like Bernie's. Although $5 is not that much money for a hamburger, some people are very tight with money and can not afford the extra $4. When putting all these factors together, more people are compelled to buy the product at a cheaper price.

2) In this scenario, it depends on the consumer and who you are selling to. If you're main consumers are teenage boys or adult men, the majority of them will be more compelled to eat a hamburger rather then a salad. In this case it depends on taste preference. Some people would rather eat a burger for lunch rather then a salad. If Bernie's and Sally's were to sell their meals at the same price, it primarily depends on taste preferences and who the consumers are.

3) If the economy is on a rise, then entree sales at both Bernie's and Sally's will go up. If people have more flexibility to go out for lunch everyday, then Bernie's and Sally's will do just fine. However when we're in a recession, people may rather save money and eat at home instead of going out. It all goes back to the fiscal cliff in a way, if our economy goes down the drain, consumers are going to be less compelled to buy, therefore businesses won't make as much money.

Extra Credit: If the prices (%) of your product is more then the % that you sell, then the total revenue is affected negatively, and it will go down. If demand is elastic, the item is very price sensitive. If the price goes up, consumers may be compelled to find other, cheaper products-- substitutes. Like when medicine comes out, people may wait for the generic brand to come out because it will be cheaper.