1. Why does the demand curve slope downward?

Since the relationship between price and quantity are inverse, this
means that as the quantity rises, the price drops, and if the quantity is
reduced, the price goes up.

2. What effect will each of the following have on the demand for
product X?
1. Product X is endorsed by a famous athlete.

Demand will rise

2. Incomes decline and product X is a normal good; How about

if it is an inferior good?

If product X was a normal good, when incomes decline, the demand for
Product X will also decline. If Product X was an inferior good, the
demand for Product X will be inversely proportional to income changes,
meaning that Product X will increase in demand.

3. The price of a complementary good increases.

If the price of a complimentary good increases, then the demand for

Product X will decrease.

4. The price of a substitute good falls.

If the price of a substitute product falls, then the demand for Product X
will also fall.

3. Differentiate between a normal (superior) and an inferior good.

A normal (or superior) good is a good whose demand changes in a

direct relationship with income changes. Meaning, if income rises,
demand will rise. On the other hand, an inferior good changes in an
inversely proportional relationship, meaning that when income rises,
demand will decrease, and vice versa.

4. Evaluate how the following situations will affect the demand curve
for AirPods.
1. Income statistics show that income of 18–25-year-olds have
increased by 10 percent over the last year.

Since income increased over the last year, demand for AirPods will also
increase, assuming that AirPods are a normal good. This will change the
demand curve so that it is shifted to the right on the graph.

2. Efforts of music artists wanting greater protection of their

music result in more stringent enforcement of copyrights and
the shutdown of numerous illegal downloading sites.

This could be considered as a complementary good- the decline in ability

to listen to music means a decline in demand for Airpods. This will shift
the demand curve to the left.
 3. Believing that it has significant control of the market for
portable digital music players, Apple decides to raise the
price of AirPods with the goal of increasing profits.

Since the price increases, demand will decrease. This will move the
demand curve to the left.

4. The price of movie tickets decreases.

Since movie tickets would be considered an independent good, this

would have little to no effect on the demand of AirPods.