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Homework answers / question archive / Which of the following would shift the demand curve for cars to the right? a- A fall in the price of cars
Which of the following would shift the demand curve for cars to the right?
a- A fall in the price of cars.
b- A fall in the price of auto insurance.
c- A fall in consumers' incomes.
d- A fall in the price of steel.
The correct option is: b- A fall in the price of auto insurance.
Since the demand curve shows the relationship between the quantity demanded and the price, a change in the price of the good leads to a movement along the demand curve. Any other factor that affects the quantity demanded leads to a shift in the demand curve. For example, a change in the price of other related products, such as the price of gasoline and the price of insurance services. When the price of auto insurance falls, people will be encouraged to buy more cars because the cost of insuring will be low. As a result, there will be an increase in the demand for cars, which will be represented by an upward shift in the demand curve.