What impact would a fall in the price of cars have on the demand for cars? a

Economics Jan 22, 2021

What impact would a fall in the price of cars have on the demand for cars?

a. The demand curve would decrease due to the lower price of cars.

b. The demand curve would increase due to the lower price of cars.

c. The quantity demand of cars would decrease as we move up on a given demand for cars.

d. The quantity demanded of cars would increase as we move down a given demand for cars.

e. The quantity demanded of cars would remain unchanged because there are no substitute for car travel.

Expert Solution

The correct answer is d. The quantity demanded of cars would increase as we move down a given demand for cars.

Explanation: The law of demand states that there is an inverse relationship between prices and quantity demanded. So, when the prices of cars fall, there will be a downward movement in the demand curve, causing quantity demanded to rise.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote