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Your local newspaper reports the following: the owners of the New Orleans Sandwich Shop in Seattle, Washington, found that when they priced their hot dogs (reportedly the rolls-royce of tube steaks) at $3.00 each, "sales were awful." When they raised the price to $3.45, sales doubled. When they raised the price to $3.75, sales doubled again!
A. Draw a diagram to show what the demand curve for these hot dogs apparently looked like.
B. Can you think of a reason why sales rose as price increased?
C. What term do economists use for a good such as this one?
D. The New Orleans Sandwich Shop slipped into oblivion when the Fran-further opened down the street and sold got dogs for $1.50. Why?
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