--%>
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 : Why warrants are hardly exercised

    Describe why warrants are hardly ever exercised unless the time to maturity is small? Warrants are hardly ever exercised until the time to expiration is small since the market price of the warrant is higher than the exercise value. The holder o

    		•
  • Q : Explain Object of Expenditure Object of

    Object of Expenditure (Objects): It is a categorization of expenditures based on the kind of goods or services received. For illustration, the budget group of Personal Services comprises the objects of Salaries and Wages and Staff Benefits.

  • Q : Recognizes and state the significance

    Normal 0 false false

  • Q : Describe the fact of common

    Normal 0 false false

  • Q : Describe the sales forecasting procedure

    Describe the sales forecasting procedure.This is a group effort. Usually sales and marketing personnel provide assessments of demand and the competition. Usually, production personnel provide estimates of manufacturing capacity and other product

    		•
  • Q : Influence of mergers and acquisitions

    What influence has mergers and acquisitions had on a customer's access to branches?A branch closing that has resulted from a merger require not necessarily mean a lost relationship. The cause a branch closes is usually the presence of a nearby b

    		•
  • Q : What is Pooled Money Investment Account

    Pooled Money Investment Account (PMIA) It is a State Treasurer's Office accountability account maintains by State Controller's Office to account for short-term investments procured by the State Treasurer's Office as designated by the Pooled Money Inve

    		•
  • Q : Explain Financial Reporting Financial

    Financial Reporting: It is a set of documents made generally by government agencies at the end of accounting period. It usually enclose summary of accounting data for that time period, with background forms, notes, and other information.

  • Q : What are Staff Benefits Staff Benefits

    Staff Benefits: It is an object of expenditure symbolizing the state costs of contributions for employee’s retirement, health benefits, OASDI, and non-industrial disability leave advantages.

    		•
  • Q : Equilibrium price level and level of

    Normal 0 false false