--%>
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 : Define Organization Code Organization

    Organization Code: The four-digit code allotted to each state governmental entity (and at times to exclusive budgetary programs) for fiscal system aims. The organization code is the initial segment of the budget item or appropriation

    		•
  • Q : Explain compound interest Normal 0

    Normal 0 false false

  • Q : Explain euro Normal 0 false false false

    Normal 0 false false

  • Q : Assignments i want to write final state

    i want to write final state report. My state is Texas.

    		•
  • Q : Describe the benefits of paying late

    Describe the benefits of "paying late" (but not too late) and how do companies try to do this? Since money has time value, the later cash is paid, but not too late, the better. Companies employ remote disbursement banks to facilitate holding at

    		•
  • Q : Explain Appropriation Appropriation :

    Appropriation: The authorization for a particular agency to make expenditures or make obligations from a particular fund for a particular purpose. It is generally limited in amount and period of time during which the expenses is to be

    		•
  • Q : What do you mean by Without Regard To

    What do you mean by Without Regard To Fiscal Year (WRTFY): Where an appropriation has no period of restriction on its accessibility.

    		•
  • Q : What is Out-of-State Travel blanket

    Out-of-State Travel (OST) blanket: The request by a state agency for Governor’s Office approval of the proposed out-of-state trips to be taken by that agency’s personnel throughout the fiscal year.

    		•
  • Q : Define Financial Planning Financial

    Financial Planning: It is a comprehensive assessment of an investor's present and future financial state by employing presently known variables to forecast future cash flows, asset values and the withdrawal plans.

  • Q : Define Sponsor Sponsor : It is an

    Sponsor: It is an individual, group, or organization which initiates or brings to a Legislator's attention a proposed law modification.

    		•