1. Do you think the price elasticity of demand for Ford sports-utility vehicles
ID: 1216373 • Letter: 1
Question
1. Do you think the price elasticity of demand for Ford sports-utility vehicles (SUVs) will increase, decrease, or remain the same when each of the following events occur? Explain your answer.
a. Other car manufacturers, such as GM, decide to make and sell SUVs.
b. SUVs produced in the foreign country are banned from the American market.
c. Due to ad campaigns, Americans believe that SUVs are much safer than ordinary vehicles.
d. The time period over which you measure the elasticity lengthens. During that longer time, new models such as four-wheel-drive cargo vans appear.
Explanation / Answer
1a. the price elasticity demand for Ford SUVs would increase since more substitutes are available.
1b. the price elasticity demand for Ford SUVs will be decreases because less substitutes are available.
1c. the price elasticity demand for Ford SUVs will be down because other cars are viewed as less of a substitute.
1d. the price elasticity of demand for Ford SUVs will be increases over time because, more substitutes become available.
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