The demand for a shake at a Juice Shop can be described by the equation: Q= 1000- 240P + 80N, where Q denotes the number of shakes sold per day, P is the shakes price and N is the price of a shake at a nearby cafe.
a. How many shakes will be sold if P=$1.50 and N= $1.20?
b. Write down the equation for the firm's demand curve for N=$1.20.
c. If the other cafe's price increases to $1.50, what is the effect on Juice Shop's demand curve?
This post examines effects on the demand curve.