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If the demand for used cars decrease after the price of new car falls what is true about the used and new cars?
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What will happen to demand for a commodity if the price of its complementary falls?
Complement goods are those goods which uses collectively or side by side e.g petrol and cars. If the demand of one good changes then demand of other good move in the same direction. If the price of product complementary falls then the demand of complementary product increases according to the demand law which in turn increase the demand of product. Suppose the prices of petrol falls which will increase the demand of petrol which in turn in increase the demand of cars.
What factors are causing the decrease in the supply of used cars?
(i) As cars have very elastic demand, this means that if price falls then automatically demand for cars will rise. And, if prise rises, demand for cars will fall. (ii) If income rises, then demand for the product will rise as consumers' purchasing power will increase. (iii) It also depends on fashion altogether with the taste of the product. Fashion will influence demand of cars. (brands, etc) (iv) Government policies affect demand for cars, taxes and subsidies will either increase/decrease demand. (v) Hire purchase facilities will increase demand for cars as it will facilitate customers when paying for the good. I would add one more very crucial factor that influences the demand for cars is the current price of petrol/diesel and the respective mileage offered by the model.
When analyzing the market for used cars graphically illustrate the impact the price of new cars falls would have on the demand and supply curve?
This depends on why price changes. I will assume price changes because of a decrease in cost of production. Supply: shifts right since producing a car is now cheaper at all levels of production. Demand: unchanged. New equilibrium: further right than before (higher quantity demanded and a lower price).
Expectation of future changes in price?
the higher the expected future price of product, the higher the current demand for that product and vice versa. for example, when government plans to increase the price of sugar the following week, the demand for sugar will immediatelly increase because consumer want to store for future use because of the expected higher price. if consumer expect the price cars to fall next year, the present demand for cars this year will decrease since consumer will wait for the price to fall.
1 Define elasticity of demand Provide an example?
Responsiveness of the demand for a good or service to the increase or decrease in its price. Normally, sales increase with drop in prices and decrease with rise in prices. As a general rule, appliances, cars, confectionary and other non-essentials show elasticity of demand whereas most necessities (food, medicine, basic clothing) show inelasticity of demand (do not sell significantly more or less with changes in price).
What would happen to the price of American cars if us raised the tariff on Japanese cars?
The price of American cars would stay the same. The price of Japanese cars would go up, causing more people to buy American cars. That's what tariffs are for. ... But, with American cars then being more affordable than Japanese cars, wouldn't demand increase on American cars and decrease on Japanese cars? The former would mean that US automakers start increasing pricing and the latter would mean that the Japanese automakers need to lower prices.
When the demand for small cars increases what might the suppliers of the large models do to sell their cars?
Lower the price of the larger models.
Who determines prices and goods that are made in a market economy?
The 'Market' determines the Prices and which Goods are made. The 'Market' consists of the customers for the goods, and the sellers and manufacturers. Basically everyone involved. The Customers create the DEMAND for items. For instance, they want small cars in a given price range. If there are only large cars at too high a price, they do NOT buy. Then manufacturers have to produce small cars at a price that will be acceptable to the 'Market', if they wish to stay in business. Similarly, if the cars are offered for sale by the retailer at too high a price, they sit unsold on the lot, UNTIL the dealer lowers the price. HOWEVER, if the cars go flying off the lot in a buying frenzy, the dealer will raise the price due to the increase in DEMAND. So price can fluctuate with demand. In an ideal Market, the supply equals the demand.
Why unemployment can be caused by a decrease of aggregate demand and supply?
Let's take a simpler approach here. Consider an economy with just one good in production: Cars. THe economy only produces cars and only employs people to produce cars. The demand for the car in that economy is 10.000 cars/year. And in order to produce 10.000 cars/ year, the economy has to employ 1000 people so 10 cars/person. For some weird reason, the demand for the cars decrease to 8000 cars/ year. Now, to produce 8000 cars, the economy only needs 800 people. Therefore, those 200 people are fired, creating unemployment. Aggregate demand works the same with the only different that it's the total demand of every single goods in an economy (cars,oils,house.... and thousands more). And so, if it falls, it needs less people to produce enough good to satisfy the demand => unemployment. Supply works in the same way if not simpler. Back to the car example, if for suddenly a factory blows up and forces the production to go down from 10.000 cars to 5.000 cars. Therefore, the economy employs 500 more employees than it needs to produce those cars. Thus, it creates unemployment where those 500 people are fired. In aggregate world, if the total (aggregate) supply falls, all those people who are on the "excess" level would be fired and become unemployed, thus generating unemployment rate.
Why is there an inverse relationship between demand and price?
If something is in high demand but there is a limited supply of it then the price goes up. Kinda of like the price of gasoline. There isn't a limited supply and alot alot of people need it for their cars and other things etc so it drives the price. If there isn't a high demand for it then the price is generally reasonable. They are inversely related. Directly related is supply and demand.
If gasonline prices increase does the demand for motorcycles increase or decrease?
Since motorcycles normally get better mileage than cars/trucks, I would think it's obvious that the demand for them increases.
What happens to demand for normal and inferior goods when there is a decrease in your income?
the demand for inferior goods varies inversely with income. If your income rises then the demand for rice will decrease. the demand for normal goods varies directly with income. If your income rises the demand for these goods will rise as well. Most goods are normal goods ie, cars, new homes, furniture, steaks, and motel rooms. Economics, Stephen L Slavin 10e
