Consider the graph. Suppose that the price of a sedan increased from $10,000 to $15,000. This would cause a curve. the demand An increase in average income causes a rightward the demand curve; therefore, you may conclude that sedans are good. (Hint: Try substituting different values for Average Income in the calculator and observing what happens.) Suppose that, due to a decrease in the number of a subways, the price of a subway ride rises from $2.00 to $2.50. Because driving a car and taking the subway are , an increase in the price of a subway ride shifts the demand curve for sedans to the 3. Determinants of demand The following calculator shows the demand curve for sedans (for example, Toyota Camrys or Honda Accords) in New York City. For simplicity, assume that all sedans are identical and sell for the same price. Initially, the calculator shows market demand under the following circumstances: Average household income is $50,000 per year, the price of a gallon of regular unleaded gas is $4 per gallon, and the price of a subway ride is $2.00. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Thousands of dollars per sedan) 40 20 0 0 Demand for Sedans Demand Graph Input Tool Demand for Sedans Price of a sedan (Thousands of dollars) Quantity Demanded (Sedans per month) Demand Shifters 20 450 Average Income (Thousands of dollars) 50 Price of Gas 4 (Dollars per gallon) Price of a Subway 2 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) Ride (Dollars) (?)
Consider the graph. Suppose that the price of a sedan increased from $10,000 to $15,000. This would cause a curve. the demand An increase in average income causes a rightward the demand curve; therefore, you may conclude that sedans are good. (Hint: Try substituting different values for Average Income in the calculator and observing what happens.) Suppose that, due to a decrease in the number of a subways, the price of a subway ride rises from $2.00 to $2.50. Because driving a car and taking the subway are , an increase in the price of a subway ride shifts the demand curve for sedans to the 3. Determinants of demand The following calculator shows the demand curve for sedans (for example, Toyota Camrys or Honda Accords) in New York City. For simplicity, assume that all sedans are identical and sell for the same price. Initially, the calculator shows market demand under the following circumstances: Average household income is $50,000 per year, the price of a gallon of regular unleaded gas is $4 per gallon, and the price of a subway ride is $2.00. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Thousands of dollars per sedan) 40 20 0 0 Demand for Sedans Demand Graph Input Tool Demand for Sedans Price of a sedan (Thousands of dollars) Quantity Demanded (Sedans per month) Demand Shifters 20 450 Average Income (Thousands of dollars) 50 Price of Gas 4 (Dollars per gallon) Price of a Subway 2 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) Ride (Dollars) (?)
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.2P
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Transcribed Image Text:Consider the graph. Suppose that the price of a sedan increased from $10,000 to $15,000. This would cause a
curve.
the demand
An increase in average income causes a rightward
the demand curve; therefore, you may conclude that sedans are
good. (Hint: Try substituting different values for Average Income in the calculator and observing what happens.)
Suppose that, due to a decrease in the number of a subways, the price of a subway ride rises from $2.00 to $2.50. Because driving a car and taking
the subway are
, an increase in the price of a subway ride shifts the demand curve for sedans to the
Transcribed Image Text:3. Determinants of demand
The following calculator shows the demand curve for sedans (for example, Toyota Camrys or Honda Accords) in New York City. For simplicity, assume
that all sedans are identical and sell for the same price. Initially, the calculator shows market demand under the following circumstances: Average
household income is $50,000 per year, the price of a gallon of regular unleaded gas is $4 per gallon, and the price of a subway ride is $2.00.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Thousands of dollars per sedan)
40
20
0
0
Demand for Sedans
Demand
Graph Input Tool
Demand for Sedans
Price of a sedan
(Thousands of
dollars)
Quantity
Demanded
(Sedans per month)
Demand Shifters
20
450
Average Income
(Thousands of
dollars)
50
Price of Gas
4
(Dollars per gallon)
Price of a Subway
2
100 200 300 400 500 600 700 800 900
QUANTITY (Sedans per month)
Ride
(Dollars)
(?)
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