The following graph shows the demand curve for sedans (for example, Toyota Camrys or Honda Accords) in Toronto. For simplicity, assume that all sedans are identical and sell for the same price. Initially, the graph shows market demand under the following circumstances: Average household income is $50,000 per year, the price of a litre of regular unleaded gas is $4 per litre, 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 scored 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. Graph Input Tool Demand for Sedans Demand for Sedans 40 I Price of a Sedan (Thousands of dollars) 20 Quantity Demanded 450 30 (Sedans per month) Demand Shifters Average Income (Thousands of dollars) 50 Demand Price of Gas (Dollars per litre) 4. Price of a Subway Ride (Dollars) 2 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) PRICE (Thousands of dollars per sedan) 20 Average Income (Thousands of dollars) 50 Demand Price of Gas (Dollars per litre) 4 Price of a Subway Ride (Dollars) 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) 1 Consider the graph. Suppose that the price of a sedan decreased from $20,000 to $15,000. This would cause a the demand curve. 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 graph input tool and observing what happens.) 4. Suppose that the price of a subway ride rises from $2.00 to $3.00. 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 PRICE (Thousands o 10
The following graph shows the demand curve for sedans (for example, Toyota Camrys or Honda Accords) in Toronto. For simplicity, assume that all sedans are identical and sell for the same price. Initially, the graph shows market demand under the following circumstances: Average household income is $50,000 per year, the price of a litre of regular unleaded gas is $4 per litre, 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 scored 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. Graph Input Tool Demand for Sedans Demand for Sedans 40 I Price of a Sedan (Thousands of dollars) 20 Quantity Demanded 450 30 (Sedans per month) Demand Shifters Average Income (Thousands of dollars) 50 Demand Price of Gas (Dollars per litre) 4. Price of a Subway Ride (Dollars) 2 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) PRICE (Thousands of dollars per sedan) 20 Average Income (Thousands of dollars) 50 Demand Price of Gas (Dollars per litre) 4 Price of a Subway Ride (Dollars) 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) 1 Consider the graph. Suppose that the price of a sedan decreased from $20,000 to $15,000. This would cause a the demand curve. 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 graph input tool and observing what happens.) 4. Suppose that the price of a subway ride rises from $2.00 to $3.00. 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 PRICE (Thousands o 10
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The following graph shows the demand curve for sedans (for example, Toyota Camrys or Honda Accords) in Toronto. For simplicity, assume that all
sedans are identical and sell for the same price. Initially, the graph shows market demand under the following circumstances: Average household
income is $50,000 per year, the price of a litre of regular unleaded gas is $4 per litre, 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 scored 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.
Graph Input Tool
Demand for Sedans
Demand for Sedans
40
I Price of a Sedan
(Thousands of
dollars)
20
Quantity
Demanded
450
30
(Sedans per month)
Demand Shifters
Average Income
(Thousands of
dollars)
50
Demand
Price of Gas
(Dollars per litre)
4.
Price of a Subway
Ride
(Dollars)
2
100 200 300 400 500 600 700 800 900
QUANTITY (Sedans per month)
PRICE (Thousands of dollars per sedan)
20
Transcribed Image Text:Average Income
(Thousands of
dollars)
50
Demand
Price of Gas
(Dollars per litre)
4
Price of a Subway
Ride
(Dollars)
100 200 300 400 500 600 700 800 900
QUANTITY (Sedans per month)
1
Consider the graph. Suppose that the price of a sedan decreased from $20,000 to $15,000. This would cause a
the demand
curve.
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 graph input tool and observing what happens.)
4.
Suppose that the price of a subway ride rises from $2.00 to $3.00. 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
PRICE (Thousands o
10
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