Index
The Demand Curve 1
The Demand Curve 2
The Demand Curve 3
The Laws of Supply and Demand - 4
The Laws of Supply and Demand - 5
A ''Contraction'' of Demand - 6
''Ceteris Paribus'' - 7
An ''Expansion'' of Demand - 8
Marginal Utility - 9
Marginal Utility - 10
Marginal Utility - 11
Marginal Utility - 12
Consumer Surplus - 13
Consumer Surplus - 14
Price Discrimination - 15
An ''Expansion'' of Supply - 16
An ''Expansion'' of Supply - 17
Market Equilibrium - 18
Market Equilibrium - 19
Market Equilibrium - 20
Movements of the Demand Curve - 21
Movements of the Demand Curve - 22
Movements of the Demand Curve - 23
Inferior Goods - 24
Movements of the Demand Curve - 25
Movements of the Supply Curve - 26
Movements of the Supply Curve - 27
Movements of the Supply Curve - 28
The Income Effect - 29
The Substitution Effect - 30
The Substitution Effect - 31
The Substitution Effect - 32
The Substitution Effect - 33
Complements - 34
Complements - 35
Review: Factors Effecting Demand - 36
Review: Factors Effecting Demand - 37
The Goals of Firms - 38
The Goals of Firms - 39
To: Elasticity

A ''Contraction'' of Demand - 6

We can show the law of demand, when we look at a market in operation.

If movie tickets cost $10 each, the average person will go to the movies twelve times per year. This is represented as the point E on the graph. The cinema owner will gain revenue equal to the price of a cinema ticket, multiplied by the number of cinema tickets sold in a specified period of time. At a price of $10 per ticket, the cinema owner will gain a revenue of $10 x 12 = $120

If the price of movie tickets rises, to $12 each, the average person will go to the movies less often; nine times per year. This is represented as the movement along the demand curve from E to E1. At a price of $12 per cinema ticket, the cinema owner will gain a revenue of $108

If movie prices rise even further, to $14 per ticket, demand will contract even further to six visits per year. This is represented as the movement along the demand curve from E1 to E2.