Do you think the price elasticity of demand for Tesla cars will increase, decrease or remain the same when each of the following events occured? Explain your answer.
a) Other car manufacturers, such as GM, decide to make and sell more hybrids.
b) Hybrids produced in foreign countries are banned from the American market.
c) Due to ads, Americans believe that hybrids are much safer than ordinary passenger cars.
d) The time period over which you measure elasticity lengthens, During that longer time, new models such as four-wheel hybrids appear.
a) As there will be more substitute for the tesla car in the market, it will increase the price elasticity of the Tesla's. The higher the substitute in the market we have the more elastic the demand gets.
b) As it will decrease the substitutes of the Tesla car's, it will make the demand more inelastic i.e. decrease the price elasticity, people will demand higher Tesla cars even at a higher price.
c) It will make the cars less elastic because now even at a lower price the demand for the cars will be higher. the answer is "less elastic"
d) As the time period has increased, In a long time period the goods are more elastic, it will increase the elasticity in the market
Do you think the price elasticity of demand for Tesla cars will increase, decrease or remain...