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ow the change in the market for electric cars that is consistent with the following statement: "When the price of electric cars is expected to rise in near future, the present price of electric cars rises. Quantity of Electric Cars Supply Demand Demand Supply

ow the change in the market for electric cars that is consistent with the following statement: "When the price of electric cars is expected to rise in near future, the present price of electric cars rises. Quantity of Electric Cars Supply Demand Demand Supply

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Title: Understanding Market Changes for Electric Cars** **Introduction:** The following discussion explores the market dynamics for electric cars, based on the concept that "when the price of electric cars is expected to rise in the near future, the present price of electric cars rises." **Graph Explanation:** - **Axes:** - The vertical axis represents the "Price of Electric Cars." - The horizontal axis represents the "Quantity of Electric Cars." - **Supply and Demand Curves:** - The orange line indicates the **Supply** curve. - The blue line indicates the **Demand** curve. - **Equilibrium:** - The intersection of the supply and demand curves indicates market equilibrium, where supply equals demand at a particular price level. - **Shift in Equilibrium:** - The graph demonstrates an increase in price due to expectations of a future price rise. Typically, consumer expectations of higher future prices increase current demand, shifting the demand curve to the right, thereby raising the equilibrium price. This model helps illustrate how market expectations can influence present market conditions and prices for commodities like electric cars.
Transcribed Image Text:**Title: Understanding Market Changes for Electric Cars** **Introduction:** The following discussion explores the market dynamics for electric cars, based on the concept that "when the price of electric cars is expected to rise in the near future, the present price of electric cars rises." **Graph Explanation:** - **Axes:** - The vertical axis represents the "Price of Electric Cars." - The horizontal axis represents the "Quantity of Electric Cars." - **Supply and Demand Curves:** - The orange line indicates the **Supply** curve. - The blue line indicates the **Demand** curve. - **Equilibrium:** - The intersection of the supply and demand curves indicates market equilibrium, where supply equals demand at a particular price level. - **Shift in Equilibrium:** - The graph demonstrates an increase in price due to expectations of a future price rise. Typically, consumer expectations of higher future prices increase current demand, shifting the demand curve to the right, thereby raising the equilibrium price. This model helps illustrate how market expectations can influence present market conditions and prices for commodities like electric cars.
**Graph Explanation: Impact of Influx of Immigrants on Healthcare Market** The graph illustrates the supply and demand dynamics in the healthcare market in response to an influx of immigrants, which subsequently increases the price of healthcare. **Axes:** - The vertical axis represents the "Price of Healthcare." - The horizontal axis represents the "Quantity of Healthcare." **Curves:** - The orange line labeled "Supply" represents the supply curve for healthcare services, which remains unchanged. - The demand curves are represented by the blue and gray lines: - \( D_1 \) (gray line) indicates the initial demand for healthcare. - \( D_2 \) (blue line) shows the increased demand due to an influx of immigrants. **Equilibrium Points:** - The initial equilibrium is where the \( D_1 \) curve intersects the supply curve, indicating the original price and quantity of healthcare. - The new equilibrium occurs where the \( D_2 \) curve intersects the supply curve, demonstrating a higher price and greater quantity of healthcare due to increased demand. In summary, the graph demonstrates that an influx of immigrants shifts the demand curve for healthcare to the right (from \( D_1 \) to \( D_2 \)), leading to a higher equilibrium price and quantity in the market.
Transcribed Image Text:**Graph Explanation: Impact of Influx of Immigrants on Healthcare Market** The graph illustrates the supply and demand dynamics in the healthcare market in response to an influx of immigrants, which subsequently increases the price of healthcare. **Axes:** - The vertical axis represents the "Price of Healthcare." - The horizontal axis represents the "Quantity of Healthcare." **Curves:** - The orange line labeled "Supply" represents the supply curve for healthcare services, which remains unchanged. - The demand curves are represented by the blue and gray lines: - \( D_1 \) (gray line) indicates the initial demand for healthcare. - \( D_2 \) (blue line) shows the increased demand due to an influx of immigrants. **Equilibrium Points:** - The initial equilibrium is where the \( D_1 \) curve intersects the supply curve, indicating the original price and quantity of healthcare. - The new equilibrium occurs where the \( D_2 \) curve intersects the supply curve, demonstrating a higher price and greater quantity of healthcare due to increased demand. In summary, the graph demonstrates that an influx of immigrants shifts the demand curve for healthcare to the right (from \( D_1 \) to \( D_2 \)), leading to a higher equilibrium price and quantity in the market.
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