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In: Economics

In 2017, In and Out Burgers charged $6.50 for a cheeseburger meal and sold 100 million...

In 2017, In and Out Burgers charged $6.50 for a cheeseburger meal and sold 100 million of them. In 2017, although In and Out raised the price to $7.00, sales of his cheeseburger meals rose to 110 million. Use the concepts of a shift in the demand curve versus a movement along the demand curve to explain why this increase in sales does not represent a violation of the law of demand.

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Expert Solution

Law of demand says that as the price of the good increase the demand for the product decrease. it is generally shown as the movement along the demand curve. But the demand is also influenced by the personal choice of the person and their taste. For example, if the demand for a product is influenced by the personal choice of the individual then the demand will increase with an increase in the price of the product.

Let's assume In and Out Burger is getting very famous in the area for the best quality burgers in the area. Then because of the goodwill will demand more and more burgers from In and out burgers. This will increase the demand for the burgers at the given price and cause a shift in the demand curve to the right i.e. more demand at a higher price.  

This is not a violation of the law of demand because the demand because the law of demand includes the external factors like a personal choice, the price of the substitute and complements etc.

Rahul Sunny answered 2 years ago
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