The reason behind the rightward shift in the demand curve.

Question

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Answer 1

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

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Answer 3

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

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Answer 4

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Answer 6

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Answer 7

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Answer 8

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Answer 12

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Answer 13

Ch. P2 - Prob. 1KC Ch. P2 - Prob. 2KC Ch. P2 - Prob. 3KC Ch. P2 - Prob. 4KC Ch. P2 - Prob. 5KC Ch. P2 - Prob. 6KC Ch. P2 - Prob. 7KC Ch. P2 - Prob. 8KC Ch. P2 - Suppose Good Foods supermarket raises the price of...Ch. P2 - Prob. 10KC

The reason behind the rightward shift in the demand curve.

The reason behind the rightward shift in the demand curve.

Answer to Problem 1KC

Explanation of Solution

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Chapter P2 Solutions