The following graph shows the demand curve for sedans in New York City. For simp
ID: 1142662 • Letter: T
Question
The following graph shows the demand curve for sedans in New York City. 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 gallon of regular unleaded gas is $4 per gallon, and the price of a subway ride is $3.00. Use the graph input tool to help you answer the following questions. You will not be graded 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 Price of a sedan (Thousand of dollars) 20 450 s 30 Sedans per month) Demand Shifters Average Income dollars) Price of Gas 50 m and 10 (Dollars per galion) 0 Type here to searchExplanation / Answer
a) Movement along the demand curve. (Because when the demand changes due to change in price , the effect is shown by the movement along the demand curve).
b) Rightward SHIFT the demand curve.( because when the demand change due to other factor rather than prices then the effect is shown by shiftment of the demand curve.)
c) sedans are NORMAL good. ( income effect for normal good is positive).
d) Complemantary goods.
e) Right.
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