Economics: The Basics 1st Edition by Mike Mandel

Exercise 6

A man lives in a small town with only one restaurant. The restaurant, run by an eccentric old gentleman, offers a dinner menu on which every dish is the same price. Each month he posts the price of the meal in the window. The following table lists the number of times the man goes out to dinner at the restaurant during the month, according to the posted price of the dinner.

a) How many times per month does the man eat at the restaurant if the price per meal is $12?
b) How many times does the man eat at the restaurant if the price per meal is $3?
c) Do your answers to (a) and (b) reflect the law of supply or the law of demand?
d) Plot the demand curve on a graph. Be sure to label the horizontal and vertical axes.
e) Can you think of a reason why quantity demanded should increase so sharply as the price of a meal drops to $3?
f) Suppose there are 10 people in town who all have the same demand schedule. Plot the market demand curve for meals.