1. Explain how you imagine the invention of cheap electric cars would affect the
ID: 2494500 • Letter: 1
Question
1. Explain how you imagine the invention of cheap electric cars would affect the demand for gasoline? Why? Which determinant of demand or supply would be affected?
Show graphically with before and after curves on the same axes.
How will this change the equilibrium price and quantity of gasoline? Explain your reasoning. (Be sure to identify which of the following apply: the cost of production, a change in technology, tastes and preferences, income, the price of substitutes or the price of complements affects equilibrium price and equilibrium quantity)
Explanation / Answer
The invension of cheap electric car would be inverse effect the demand for gasoline.cheap elctric car introdused in the market most of people buy that car, then gasoline cars demand decreesed.then gasoline demand decline.
price of these commodity are effected.gasoline price is high so consumer buy newly introdused car.
Elcric car demand increesed as result gasoline demand decreesed.then gasoline price decline.
a)cost of production
As elecric car cost of production is less so car producer sell at cheaper price.that leads to gasoline demand decreesed.
b)change in technology
electrical car invension change in demand for gasoline .
c)Taste and preferences
consumer taste and preferences as change in invension of new things.
d)Income
cosumer income changes the demand for older things decline
e)price of sustitute
substitute price lowe.r when consumer choose cheap sbstitute
these factors are effected the equilibrium price and quantity changes in gasoline
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