Concept: Demand

This diagram shows the demand curve for compact discs (CDs). Notice that the horizontal axis is measured in terms of millions of CDs and that the vertical axis is measured in terms of dollars per disc.

1. What is the quantity of CDs demanded if the price is $10 per CD? Show this quantity on your diagram and determine an approximate numerical value.

2. Next, suppose that people’s incomes increase. What effect will this have on the demand for CDs? Show this effect in the graph.