Answer to Question #119823 in Economics of Enterprise for umang

Question

In late 1981, your father went to a Honda dealer in his home state and paid about $1,000 more for a Civic than he would have paid the year before. Why?

Answer 1

1. There is a high demand for the Honda civic in that year compared to the previous year and due to inadequate supply to match the demand, automatically the price goes up.

2. Increase in rate of inflation in the country thus leading to general increase in prices of commodities.