Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs. Concept Introduction: Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Question

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Answer 1

Question

Chapter 5, Problem 1P

To determine

To explain:

Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs.

Concept Introduction:

Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Expert Solution & Answer

Explanation of Solution

(a) Other car manufacturers decide to make and sell car S.

The price elasticity of demand for Company F’s car S will increase if the other car manufacturers decide to make and sell car S.

This is because buyers will have a substitute to Company F cars and as a result the price elasticity of demand will increase.

Conclusion:

The elasticity will increase.

(b) Car S produced in foreign countries are banned from markets.

The price elasticity of demand for Company F’s car S will decrease if the car S produced in foreign countries is banned from the market.

This is because buyers will not have a substitute to Company F cars and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(c) Car S much safer than ordinary passenger cars.

The price elasticity of demand for Company F’s car S will decrease if car S is believed to be much safer than ordinary passenger cars.

This is because buyers will believe that there are no close substitutes to Company F’s car S and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(d) New models such as four-wheel drive cargo vans appear.

The price elasticity of demand for Company F’s car S will increase if there are new models available over time.

This is because buyers will have substitutes to Company F’s car S and the demand of car S will decrease. As a result, the price elasticity of demand will increase because the change in quantity is larger than the change in price.

Conclusion:

The elasticity will increase.

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Answer 2

Question

Chapter 5, Problem 1P

To determine

To explain:

Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs.

Concept Introduction:

Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Expert Solution & Answer

Explanation of Solution

(a) Other car manufacturers decide to make and sell car S.

The price elasticity of demand for Company F’s car S will increase if the other car manufacturers decide to make and sell car S.

This is because buyers will have a substitute to Company F cars and as a result the price elasticity of demand will increase.

Conclusion:

The elasticity will increase.

(b) Car S produced in foreign countries are banned from markets.

The price elasticity of demand for Company F’s car S will decrease if the car S produced in foreign countries is banned from the market.

This is because buyers will not have a substitute to Company F cars and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(c) Car S much safer than ordinary passenger cars.

The price elasticity of demand for Company F’s car S will decrease if car S is believed to be much safer than ordinary passenger cars.

This is because buyers will believe that there are no close substitutes to Company F’s car S and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(d) New models such as four-wheel drive cargo vans appear.

The price elasticity of demand for Company F’s car S will increase if there are new models available over time.

This is because buyers will have substitutes to Company F’s car S and the demand of car S will decrease. As a result, the price elasticity of demand will increase because the change in quantity is larger than the change in price.

Conclusion:

The elasticity will increase.

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Answer 3

Question

Chapter 5, Problem 1P

To determine

To explain:

Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs.

Concept Introduction:

Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Expert Solution & Answer

Explanation of Solution

(a) Other car manufacturers decide to make and sell car S.

The price elasticity of demand for Company F’s car S will increase if the other car manufacturers decide to make and sell car S.

This is because buyers will have a substitute to Company F cars and as a result the price elasticity of demand will increase.

Conclusion:

The elasticity will increase.

(b) Car S produced in foreign countries are banned from markets.

The price elasticity of demand for Company F’s car S will decrease if the car S produced in foreign countries is banned from the market.

This is because buyers will not have a substitute to Company F cars and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(c) Car S much safer than ordinary passenger cars.

The price elasticity of demand for Company F’s car S will decrease if car S is believed to be much safer than ordinary passenger cars.

This is because buyers will believe that there are no close substitutes to Company F’s car S and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(d) New models such as four-wheel drive cargo vans appear.

The price elasticity of demand for Company F’s car S will increase if there are new models available over time.

This is because buyers will have substitutes to Company F’s car S and the demand of car S will decrease. As a result, the price elasticity of demand will increase because the change in quantity is larger than the change in price.

Conclusion:

The elasticity will increase.

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Answer 4

Question

Chapter 5, Problem 1P

To determine

To explain:

Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs.

Concept Introduction:

Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Expert Solution & Answer

Explanation of Solution

(a) Other car manufacturers decide to make and sell car S.

The price elasticity of demand for Company F’s car S will increase if the other car manufacturers decide to make and sell car S.

This is because buyers will have a substitute to Company F cars and as a result the price elasticity of demand will increase.

Conclusion:

The elasticity will increase.

(b) Car S produced in foreign countries are banned from markets.

The price elasticity of demand for Company F’s car S will decrease if the car S produced in foreign countries is banned from the market.

This is because buyers will not have a substitute to Company F cars and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(c) Car S much safer than ordinary passenger cars.

The price elasticity of demand for Company F’s car S will decrease if car S is believed to be much safer than ordinary passenger cars.

This is because buyers will believe that there are no close substitutes to Company F’s car S and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(d) New models such as four-wheel drive cargo vans appear.

The price elasticity of demand for Company F’s car S will increase if there are new models available over time.

This is because buyers will have substitutes to Company F’s car S and the demand of car S will decrease. As a result, the price elasticity of demand will increase because the change in quantity is larger than the change in price.

Conclusion:

The elasticity will increase.

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Answer 5

Chapter 5, Problem 1P

To determine

To explain:

Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs.

Concept Introduction:

Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Expert Solution & Answer

Explanation of Solution

(a) Other car manufacturers decide to make and sell car S.

The price elasticity of demand for Company F’s car S will increase if the other car manufacturers decide to make and sell car S.

This is because buyers will have a substitute to Company F cars and as a result the price elasticity of demand will increase.

Conclusion:

The elasticity will increase.

(b) Car S produced in foreign countries are banned from markets.

The price elasticity of demand for Company F’s car S will decrease if the car S produced in foreign countries is banned from the market.

This is because buyers will not have a substitute to Company F cars and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(c) Car S much safer than ordinary passenger cars.

The price elasticity of demand for Company F’s car S will decrease if car S is believed to be much safer than ordinary passenger cars.

This is because buyers will believe that there are no close substitutes to Company F’s car S and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(d) New models such as four-wheel drive cargo vans appear.

The price elasticity of demand for Company F’s car S will increase if there are new models available over time.

This is because buyers will have substitutes to Company F’s car S and the demand of car S will decrease. As a result, the price elasticity of demand will increase because the change in quantity is larger than the change in price.

Conclusion:

The elasticity will increase.

Answer 6

Chapter 5, Problem 1P

To determine

To explain:

Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs.

Concept Introduction:

Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Expert Solution & Answer

Explanation of Solution

(a) Other car manufacturers decide to make and sell car S.

The price elasticity of demand for Company F’s car S will increase if the other car manufacturers decide to make and sell car S.

This is because buyers will have a substitute to Company F cars and as a result the price elasticity of demand will increase.

Conclusion:

The elasticity will increase.

(b) Car S produced in foreign countries are banned from markets.

The price elasticity of demand for Company F’s car S will decrease if the car S produced in foreign countries is banned from the market.

This is because buyers will not have a substitute to Company F cars and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(c) Car S much safer than ordinary passenger cars.

The price elasticity of demand for Company F’s car S will decrease if car S is believed to be much safer than ordinary passenger cars.

This is because buyers will believe that there are no close substitutes to Company F’s car S and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(d) New models such as four-wheel drive cargo vans appear.

The price elasticity of demand for Company F’s car S will increase if there are new models available over time.

This is because buyers will have substitutes to Company F’s car S and the demand of car S will decrease. As a result, the price elasticity of demand will increase because the change in quantity is larger than the change in price.

Conclusion:

The elasticity will increase.

Answer 7

Chapter 5, Problem 1P

To determine

To explain:

Whether the price elasticity of demand for ford SUVs will increase, decrease or remain the same when each of following events occurs.

Concept Introduction:

Price Elasticity of Demand: Price elasticity of demand stands for the change in the quantity demanded due to the change in the price of a good or service. If a small change in price causes a large change in quantity, then the good or service is said to be elastic. If a change in price causes little or no change in quantity, then the good or service is said to be inelastic.

Answer 8

Expert Solution & Answer

Explanation of Solution

(a) Other car manufacturers decide to make and sell car S.

The price elasticity of demand for Company F’s car S will increase if the other car manufacturers decide to make and sell car S.

This is because buyers will have a substitute to Company F cars and as a result the price elasticity of demand will increase.

Conclusion:

The elasticity will increase.

(b) Car S produced in foreign countries are banned from markets.

The price elasticity of demand for Company F’s car S will decrease if the car S produced in foreign countries is banned from the market.

This is because buyers will not have a substitute to Company F cars and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(c) Car S much safer than ordinary passenger cars.

The price elasticity of demand for Company F’s car S will decrease if car S is believed to be much safer than ordinary passenger cars.

This is because buyers will believe that there are no close substitutes to Company F’s car S and as a result the price elasticity of demand will decrease.

Conclusion:

The elasticity will decrease.

(d) New models such as four-wheel drive cargo vans appear.

The price elasticity of demand for Company F’s car S will increase if there are new models available over time.

This is because buyers will have substitutes to Company F’s car S and the demand of car S will decrease. As a result, the price elasticity of demand will increase because the change in quantity is larger than the change in price.

Conclusion:

The elasticity will increase.