Consider the market for minivans. For each of the events listed, identify which of the determinants of demand are affected. Also indicate whether demand is increased or decreased. People decide to have more children. The price of station wagons rises.
Consider the market for minivans. For each of the events listed, identify which of the determinants of demand are affected. Also indicate whether demand is increased or decreased. People decide to have more children. The price of station wagons rises.
Chapter5: Supply, Demand, And Price: Applications
Section: Chapter Questions
Problem 4WNG
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Question
- Consider the market for minivans. For each of the events listed, identify which of the determinants of demand are affected. Also indicate whether demand is increased or decreased.
- People decide to have more children.
- The price of station wagons rises.
Expert Solution
Step 1
(a)
If people decide to have more children, then the demand for minivans will increase because an increase in the number of children means an increase in the number of population or consumers or buyers. Also, is the parents decide more children they will choose a minivan for their personal travels.
Step 2
In the fig. D is the demand curve and S is the supply curve. The rise in population (consumer) will shift the demand curve from D to D1. Consequently, this will increase the price from P to P1 and quantity from Q to Q1. Moreover, the equilibrium will also shift rightwards, and a new equilibrium will occur at point e1.
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