Answer to Question #81527 in Microeconomics for Tuba cheema

Question

What effects will each of the following have on the demand for small automobiles such as smart car?
A- small automobiles become more fashionable.
B- the piece of large automobiles rises ( the price of small automobiles renaming same).
C- income decline and small automobiles are an inferior goods.
D- consumers anticipate that the price of small automobiles will greatly come down in the near feature.
E- the price of gasoline substantially drops.

Answer 1

a. Small automobiles become more fashionable: Demand will increase.

b. The price of large automobiles rises (with the price of small autos remaining the same): Demand will increase.

c. Income declines and small autos are an inferior good: Demand will increase.

d. Consumers anticipate that the price of small autos will greatly come down in the near future: Demand will decrease.

e. The price of gasoline substantially drops: The demand cannot be determined.