2. Due to U.S. tariffs on Chinese and Korean washing machines and tariffs also i

Question

2. Due to U.S. tariffs on Chinese and Korean washing machines and tariffs also increasing the price of steel used to manufacture washing machines in the U.S, the price of washing machines is increased 20% in September. Given the reality of demand, washing machine sellers such as Best Buy and Amazon 20% price increase. know the quantity of washing machines sold will decrease in response to the Will the quantity of washing machines sold over the next twelve months decrease more or less than 20% why? (2 points) a.

Explanation / Answer

2. a) The qty of washing machines sold will decrease less than 20%, beause price increase by 20% will not necessarily mean that 20% buyers will not buy washing machines. Price increase will definately lead to fall in demand but not to the tune of 20%.

b) The qty of washing machines sold will be less than 20% because price increase will lead to fall in demand. Although as compared to this year the fall in next ear will be less as people will start getting used to these prices.

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