You are an owner of a car wash, and you meet with other neighborhood car wash ow

Question

You are an owner of a car wash, and you meet with other neighborhood car wash owners. Consider that trips through the car wash and washing your car at home are substitutes. In an attempt to increase sales, you collectively decide to lower prices by 10%. Which of the following are consequences of this price change?

Choose one or more:

A. The supply of trips through the car wash will decrease.

B. The demand for trips through the car wash will not change.

C. The demand for trips through the car wash will increase.

D. The quantity supplied of trips through the car wash will decrease.

E. The supply of trips through the car wash will increase.

F. Demand for washing your car at home will decrease.

Explanation / Answer

The demand for a product increases when its price falls.When the price for car wash falls,the quantity demanded for car wash increases.Since washing car at home and trips through the car wash are substitutes and the cost of the trip are reduced,the demand for car wash at home will fall This is because trips to the car wash has become relatively cheaper

Answer-F.

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