This discussion is about to differentiate between change in quantity demanded and change in demand

Your friend Tony opened a pizzeria. You helped him to advertise his pizza, which is in fact the best pizza in town. As a result, the demand for Tony’s pizza increases and your friend, noticing lines of customers, raises the price of his pizza. But then he fears that the higher price will cause demand to decline, which will cause the price to drop. What do you think about Tony’s analysis of the situation? Is he right?

Note for Discussion 2
This discussion is about to differentiate between change in quantity demanded and change in demand. It is important that we distinguish between change in quantity demanded, which is the result of change in price, and change in demand (not quantity demanded)., [ There are several factors that can change the situation of demand in the market. One of these factors is the price: if the price change we say that there is a change in the quantity demanded. But there are other non-price factor such as: income, number of population, product substitute and complement, that can change the demand.
In summary:
– when there is a change in the price there will be a change in quantity demanded
– when there is a change in no-price factors (other things than price) we will have a Change in demand.

SAMPLE SOLUTION

Discussion Two
From Tony’s case study, it can be established that the increase in demand is based on effective advertisements done on the pizza. An increase in demand is based on the quality of the product since Tony’s Pizza is the best in the market. At the same time, Tony charges reasonable prices for his pizza, increasing its affordability among the target customers. In this case, two aspects of demand need to be differentiated.
The change in quantity demanded refers to the change in the quantity purchased based on the increase or decrease of the product’s price (Litkowski, 2014). In the conventional market, the decline in prices leads to an increase in the quantity demanded….