Econ--- Is it an increase in demand or quantity demanded?

2008-03-29 7:14 am
Suppose a shop launches a 'Buy 1 get 1 free' promotion campaign. Will it
cause an increase in demand or quantity demanded? Does this change caused
by price? Explain it briefly.

Thank you

回答 (2)

2008-03-29 7:22 am
✔ 最佳答案
A change in demand is caused by a change in third factors except its own price, holding all other factors constant.
It is represented by a shift of the entire demand curve.
A change in quantity demanded is caused by a change in its own price, holding all other factors constant.
It is represented by a movement along the same demand curve.
Therefore, when the shop proposes 'Buy 1 get 1 free' promotion campaign', which is a change in its own price, the quantity demanded for its goods increase.
( Note: It's a pricing strategy. )

The below diagram shows the effects:



圖片參考:http://i238.photobucket.com/albums/ff245/chocolate328154/Econ036.jpg?t=1202117705




2008-03-29 11:58:29 補充:
For the explanation part in your hw, you may skip the first sixth lines as I just want to give you more information and show you how the judgement is arrived.
參考: My Econ Knowledge
2008-03-29 10:10 am
Buy 1 get 1 free have nothing to do with the demand, it has something to do with indifference curve. the Budget line.

I can't draw a diagram here to show you but

1. draw a horizontal axis and a verticle axis. Label good Y in the verticle axis and X in the horizontal axis.

2. draw a budget line, draw a indifference curve, MRS doesn't matter because there were not information given.

3. shift the budget line out (right), Draw only half, and that will be your buy 1 get 1 free diagram
參考: Myself


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