Question

The following events listed below has an impact on the market for Car. For each event, which curve is affected (supply or demand for Car), what direction is it shifted, and what is the resulting impact on equilibrium price and quantity of Car? (Draw graph for each event) Questions 1. The price of car decrease in the market 2. The price of steel used to make car frames increases. 3. An environmental movement shifts tastes toward bicycling. 4. Consumers expect the price of car to fall in the future. 5. A technological advance in the manufacture of car occurs.

Answer 1

According to given question it can be clearly seen that here the shift can be either for supply or demand towards left or right

1

In the first question if the price of car decreases then this will lead to have more demand of car in the market and causes the shift of demand curve to the right

2.

The pric of steel that is used for making the car increases it means it will have cause more burden on the suppliers this will lead to have fall in supply and shift of supply curve to the left

3.

Due to environmental concerns more people are are shifting their taste to what bicycling so this will lead to have more demand of bicycle and shift of demand curve to the right

4.If inthe future consumers are expecting the fall in the price of car so today they will buy less and this will cause the shift of demand curve to the left

5.

When there is technological advancement then it is beneficial for the suppliers because it will cause less input for the output so there will be rightward shift of the supply curve shown below

17 P($) Right Shift Q car

stel 37 Pl$) Right Shift Q bicycle 2) P($) 1 lept Shift Supply O Steel

$) 47 demand Shift lept P($) Right Shift T Supply O cas