PRICE Thousands of dollars per sedan 8 30 20 curve Demand for Sedans Demand 100 200 300 400 500 600 700 800 900 QUANTITY Sedans

Question

PRICE Thousands of dollars per sedan 8 30 20 curve Demand for Sedans Demand 100 200 300 400 500 600 700 800 900 QUANTITY Sedans per month are An increase in average income causes a rightward are Demand for Sedans Price of a sedan Thousands of dollars Quantity Demanded Sedans per month Demand Shifters Average Income Thousands of dollars 1 movement along or shift of 2 shift of or movement along 3 a normal or an inferior 4 substitutes or complements Price of Gas Dollars per gallon Price of a Subway Ride Dollars 20 450 Consider the graph Suppose that the price of a sedan increased from 15 000 to 20 000 This would cause a 50 4 2 the demand curve therefore you may conclude that sedans good Hint Try substituting different values for Average Income in the calculator and observing what happens Suppose that due to an increase in the supply of gasoline the price of a gallon of gas falls from 4 to 3 Because sedans and gasoline decrease in the price of a gallon of gas shifts the demand curve for sedans to the the demand

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