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Homework answers / question archive / For each of the following events, identify which of the determinants of demand are affected
For each of the following events, identify which of the determinants of demand are affected. If demand is unaffected by this event because it creates a supply change, select the none option.
Events
1. People decide to have more children.
2. A strike by steelworkers raises steel prices.
3. Engineers develop new automated machinery for the production of minivans.
4. The price of sports utility vehicles rises.
5. A stock-market crash lowers people's wealth.
Demand Determinants
Choose from
A. Income
B. price of substitute or complement
C. Tastes
D Expectations
E. Number of buyers
F. None
1. People decide to have more children.
Number of buyers. High birth rates will increase the number of buyers and hence an increase in demand for the product.
2. A strike by steelworkers raises steel prices.
None. This factor will result in a change in supply, that is, the strike by steelworkers will increase the cost of production and hence a reduction in supply which causes high prices.
3. Engineers develop new automated machinery for the production of minivans.
None. This factor will cause a change in the supply of minivans, that is, the supply of minivans will increase due to the discovery of new technology.
4. The price of sports utility vehicles rises.
Price of substitute or complement. An increase in the price of sports utility vehicles will cause the demand for these vehicles to drop because buyers will switch to substitutes like minivans.
5. A stock-market crash lowers people's wealth.
Income. The crash in the stock market will lower the income of individuals and thus reduce the demand for goods.
