Question

1000 - 800 600 400 200 40 80 120 160 200 240 280 320 QUANTITY OF ELECTRIC CARS (Millions of cars) If the price of an electric car is $800 per car, consumers are willing to buy 160 million electric cars. The maximum price at which consumers are willing to buy 120 million electric cars is $1,000 per car. Lots of people would like to own an electric car, but people who value electric cars below the market price choose no to buy them. As the price of an electric car falls, the quantity demanded of electric cars will decrease because, at lower prices, there are fewer people who value the car at a level above the market price. This illustrates the law of demand , which describes the relationship between the price of a good or service and the quantity demanded even when other variables change based on how much people want to purchase during a particular time period

Answer 1

Ans) Willingness to pay is the maximum price that a consumer is willing to pay for any product. If market price is above willingness to pay, person will not buy the good or service.

Law of demand states that there is an inverse relationship between price and quantity demanded. That is, as price increases, quantity demanded decreases and vice versa.

Therefore, at lower price, more people are willing to buy the product and quantity demanded will increase.

1000 800 600 400 200 140 80 120 160 200 240 280 320 QUANTITY OF ELECTRIC CARS (Millions of cars) If the price of an electric car is $800 per car, consumers are willing to buy 160 million electric cars. The maximum price at which consumers are willing to buy 120 million electric cars is $1,000 per car. Lots of people would like to own an electric car, but people who value electric cars below the market price choose no to buy them. As the price of an electric car falls, the quantity demanded of electric cars will increase because, at lower prices, there are more people who value the car at a level above the market price. This illustrates the law of demand , which describes the relationship between the price of a good or service and the quantity demanded even when other variables change based on how much people want to purchase during a particular time period