Problem Set 1
In January 2014 the price of a 2014 Buick was $20,000 and 50,000 units were sold. At October 2014, the price of a 2014 Buick dropped to $18,000 and 60,000 units were sold.
1. Identify what has happened in the market for Buicks in the context of demand.
2. Show that you have a deeper understanding - based on your explanation in question 1, distinguishing between change in quantity demanded and change in demand.
3. Enumerate the factors that may cause a change in quantity demanded and change in demand (list three).
4. Assess how one of the three factors that can cause a change in demand would affect the demand for Buick. Explain it.
5. Scrutinize (Scrutinize means examine or inspect carefully) what would happen to the demand for Buicks if there is an increase in income (remember the definition of a normal good and inferior good).