This question has two parts: Part A deals with demand, and Part B deals with sup

Question

This question has two parts: Part A deals with demand, and Part B deals with supply. Please make sure
that you carefully answer all parts of this question:
PART A
Consider the demand for automobiles (a normal good) in a placed referred to as Region A. For each of
the following, state the effect on demand. (Note that you are only asked to state the effect on demand,
and you are not required to draw any graphs.)

1. An increase in consumer incomes.
2. A large rise in gasoline prices.
3. The introduction of a subway system in Region A.
4. The introduction of a 0% APR promotion on new automobiles.
5. A large emigration of adults from Region A. (These adults are migrating to a different region.)

PART B
Consider the supply of computers (a normal good). For each of the following, state the effect on supply:
6. A change in technology that raises production costs
7. A decrease in the price of semiconductors
8. An increase in the price of computers
9. A decrease in the wages of computer assembly workers
10. A decrease in consumer incomes

Explanation / Answer

Part-A Effect on demand: 1. Increase in Consumer Income: Increase in demand 2. A large price in Gasoline prices: Decrease in demand 3. The introductin of Subway system in region: Decrease in demand 4. The Introduction of 0% APR: Increase in demand 5. A large emigration of adults from Region A: Decrease in demand Part-B Effect on Supply: 6. A change in technology that raises production cost: Decrease in supply 7. A decrease in price of semiconductors: Increase in Supply. 8. An increaase in price of computers: No Change in demand (it will be a decrease in quantity demanded) 9. A decrease n wages of computer assembly workers: Increase in supply 10. A decrease in consumer income: No change in supply.

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