--%>
Assignment Help - homework help

Demand for small automobiles

What influence will each of the following contain on the demand for small automobiles such as the Mini Cooper & Smart car?

a.            Small automobiles become more fashionable.

b.            The price of large automobiles increase (along with the price of small autos remaining the similar).

c.            Income declines & small autos are an inferior good.

d.            Consumers anticipate the price of small autos will really come down in the near future.

e.            The price of gasoline drops substantially.

E

Expert

Verified

Demand enhance in (a), (b), and (c); decreases in (d). The last one (e) is ambiguous. As autos and gas are complements, one could argue that the reduction in gas prices would stimulate demand for all cars, comprising small ones. However, one could also argue that small cars are attractive to consumers due to fuel efficiency, and that a reduction in gas prices effectively decreases the price of the “gas guzzling” substitutes. That would encourage consumers to switch from smaller to larger cars (SUVs), and demand for small automobiles would drop. [It presents a good instance of the complexity of many of these changes.]

   Related Questions in Finance Basics

  • Q : Why do businesses spend efforts to

    Why do businesses spend effort, time and money to generate forecasts?  Describe.Businesses succeed or fail based on how well prepared they are to deal along with the situations they confront in the future. Hence they expend considerable sum

    		•
  • Q : Time Value of Money Problems on a Texas

    TVM Appendix B: Using the TI-83/84  Time Value of Money Problems on a Texas Instruments TI-831 Before you start:  To calculate problems on a TI-83, you have to go into the applications menu, the blue  “APPS” key on the calculator. Several

    		•
  • Q : State Section 8.50 Section 8.50 : The

    Section 8.50: The Control Section of Budget Act gives the authority to raise federal funds expenses authority.

    		•
  • Q : Chartered banks Normal 0 false false

    Normal 0 false false

  • Q : Nominal GDP and suitable price index

    Normal 0 false false

  • Q : What is FERA FERA stands for The

    FERA stands for The Federal Emergency Relief Administration. The program was renamed as a direct relief operation in Roosevelt Administration. It was a form of an unemployment insurance.

    		•
  • Q : Define Subcommittee Subcommittee : The

    Subcommittee: The smaller groupings into which the Senate or Assembly committees are frequently divided. For illustration, the fiscal committees which hear the Budget Bill are classified into subcommittees usually by departments or subject area (examp

    		•
  • Q : FIN 335: Time Value of Money Problems

    FIN 335: Time Value of Money Problems  Computed on a Texas Instrument BA II Plus financial calculator  Before you start:  ? The calculator com

    		•
  • Q : Portfolio Analysis And Management My

    My Assignment is writing a Three page paper including executive Summary and investing 1million Dollars in Stocks, Bonds and Mutual Funds and Other Assets and Recording Each Investments made Every Friday of the week, Beginning On September 7th to October 30 on An excel spreadsheet which has been crea

    		•
  • Q : What are a banks main reserves What are

    What are a bank's main reserves? Vault cash & deposits in the bank's account at the Fed are utilized to satisfy these reserve requirements; they are termed as primary reserves.  These primary reserves are non-interest-earning assets hel

    		•