Question
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,
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? 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).
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