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28 July, 18:42

Assume you initially sold wrist watches at $75 per watch. At that price, consumers purchased 10 watches per week. You decide to drop the price to $50 per watch. As a result, consumers purchase 35 watches per week. Is this an increase in demand? Explain why or why not.

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  1. 28 July, 22:21
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    Yes, this is an increase in demand

    Explanation:

    Demand increased from 10 watches per week to 35 watches per week.

    This is an increase in demand and it was induced by the drop in price from $75 to $50.

    Consumers tend to buy more at lower price and tend to reduce their demand at higher price. This is the law demand.

    Higher price reduces consumers' purchasing power.
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