FIGURE 3-2

-Refer to Figure 3-2. 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. What do the customers do as a result?
A) They increase purchases at Yum Yum to Q1.
B) They buy the same quantity of Yum Yum donuts as before the price change.
C) They decrease demand to D0.
D) They decrease purchases at Yum Yum to Q0.

Question

FIGURE 3-2
 
-Refer to Figure 3-2. 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. What do the customers do as a result?
A) They increase purchases at Yum Yum to Q1. 
B) They buy the same quantity of Yum Yum donuts as before the price change. 
C) They decrease demand to D0. 
D) They decrease purchases at Yum Yum to Q0.

Quizplus · Accepted Answer

When the price of donuts at Yum Yum Donut Shop decreases from P₀ to P₁, customers respond by increasing their purchases from the initial quantity to Q1, moving along the demand curve D₁.

FIGURE 3-2 -Refer to Figure 3-2. Two Donut Chains in Your Town