6. Determinants of demand The following graph input tool shows the demand for sedans 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 $3 per gallon, and the price of a subway ride is $1.50. Use the graph input tool to help you answer the questions that follow. (Note: You will not be graded on any adjustment made to the graph used in the tool.) PRICE (Thousands of dollars per sedan) Demand 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) Graph Input Tool Price of a sedan (Thousands of dollars) Quantity of sedans (Sedans per month) Average Income (Thousands of dollars) Price of gasoline (Dollars per gallon) Price of a subway ride Suppose that the price of a sedan decreased from $25,000 to $20,000. This would cause a 25 450 50 $3.00 $1.50 Suppose that the price of a subway ride rises from $1.50 to $2. Because driving a car and taking the subway are the price of a subway ride shifts the demand curve for sedans to the the demand curve. (?) an increase in

6. Determinants of demand The following graph input tool shows the demand for sedans 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 $3 per gallon, and the price of a subway ride is $1.50. Use the graph input tool to help you answer the questions that follow. (Note: You will not be graded on any adjustment made to the graph used in the tool.) PRICE (Thousands of dollars per sedan) Demand 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) Graph Input Tool Price of a sedan (Thousands of dollars) Quantity of sedans (Sedans per month) Average Income (Thousands of dollars) Price of gasoline (Dollars per gallon) Price of a subway ride Suppose that the price of a sedan decreased from $25,000 to $20,000. This would cause a 25 450 50 $3.00 $1.50 Suppose that the price of a subway ride rises from $1.50 to $2. Because driving a car and taking the subway are the price of a subway ride shifts the demand curve for sedans to the the demand curve. (?) an increase in

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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