Price Quantity Quantity (dollars per demanded, demanded, 200 2010 CD) (CDs per year) (CDs per year) 40 70 30 50 12 20 30 16 10 10 18 5 0 20 0 Cory enjoys listening to all types of music. His demand schedules for CDs in 2009 and 2010 are shown in the table above. Cory's income was $30,000 in 2009 and $35,000 in 2010. In 2010, he bought an ipod so he started to download music files from the Internet. A. Draw Cory's demand curves for CDs in 2009 and 2010. How did Cory's demand for CDs change? Why? B. For each year, calculate Cory's price elasticity of demand as the price of CDs decreases from $16 to $12. (Use the midpoint method in your calculations.) C. Why might the price elasticity of Cory's demand for CDs in 2010 be different from that in 2009? D. If all CD buyers have the same demand as does Cory, what price should the record companies charge in 2010 to maximize their total revenue from CD sales? Answer: 21 Price Kdollars per CDS 10 20 30 20 50 60 70 80 Quantity (CD. per year! C. The availability of substitutes is a factor that influences the price elasticity of demand. The new ability to download files is a substitute for pre-recorded CDs and When Cys increased for the A. The figure above shows Cory's two demand curves. Cory's demand for C prices below $16 and decreased for the prices above $16. There are two factors that affected Cory's demand for CDs: Cory's income changed, and a substitute for CDs, the new music service