--%>
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 : Explain Public Service Enterprise Fund

    Public Service Enterprise Funds: For legal base accounting purposes, the fund categorization which identifies funds utilized to account for the transactions of self-supporting enterprises which render goods or services for a direct charge to user (tha

    		•
  • Q : Fixed Income I need solution by Tuesday

    I need solution by Tuesday evening March 18, 6 pm EST

    		•
  • Q : Describe why measure projects risk as

    Describe why we measure a project's risk as the change in the CV.We measure a project's risk since the change in the coefficient of variation since this focuses on the change in the riskiness of the firm's existing portfolio.

    		•
  • Q : Would there be positive interest rates

    Normal 0 false false

    		•
  • Q : Describe Reappropriation

    Reappropriation: The expansion of an appropriation’s accessibility for encumbrance and/or expenses beyond its set annihilation date and/or for a new point. Re-appropriations are usually authorized by statute for 1-year at a time however might be

    		•
  • Q : What are A-pages A-pages : An ordinary

    A-pages: An ordinary reference to the Governor's Budget synopsis. The Budget highlights now contained in the Governor's Budget synopsis were just once contained in front of the Governor's Budget on pages A-1, A-2, and so on, and were,

    		•
  • Q : Explain State-Mandated Local Program

    State-Mandated Local Program: The state compensations to local governments for the cost of activities needed by legislative and executive acts. This reimbursement necessity was established, Statutes of 1972 (SB 90) and further approved by the adoption

    		•
  • Q : Which insurance company takes on the

    Which kind of insurance company usually takes on the greater risks: a life insurance company or a property and casualty insurance company? The risks sheltered against by property and casualty companies are much less predictable than are the risk

    		•
  • Q : What do analyze in pro forma financial

    Normal 0 false false

  • Q : Describe Schedule 7A Schedule 7A : The

    Schedule 7A: The summary version of the State Controller’s Office detailed Schedule 8 position register for each department. The information replicated in this schedule is the base for the “Salaries and Wages Supplement” exhibited on

    		•