Draw a graph to illustrate the effect of higher gasoline prices on the demand for large SUVs. What is the relationship between gasoline and SUVs?
What will be an ideal response?
Gasoline and SUVs are complements. When the price of gasoline rises it becomes more expensive to drive an SUV, and so the demand for SUVs is likely to decrease (people may switch to smaller, more fuel-efficient vehicles). Note that as a result of the decrease in demand for SUVs their price should decrease and so should the quantity of SUVs sold.
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Which of the following is least likely to lead to inflationary monetary policy?
A) rising unemployment B) expanding federal budget deficits C) declining oil prices D) conflict in the Middle East
Which of the following serves only the best known and heavily traded securities?
A. NYSE B. Multiple regional exchanges C. AMEX D. NASAQ
(Use the graph of the wheat market in Economic Insight 9.1, on p. 162 of the text.) S1 shows the supply curve for wheat in the local market. S2 shows the supply curve for wheat in more distant markets in the early 1800s. S3 shows the supply curve for wheat in more distant markets in the mid-1800s. Given the information provided, we can conclude that
a. the price that wheat producers received per bushel rose from P2F to P2C during the antebellum period. b. the price paid by wheat buyers in distant markets fell from P2C per bushel to P3C per bushel during the antebellum period. c. in the mid-1800s, wheat buyers in distant markets paid P3F per bushel and wheat producers received P3C per bushel. d. wheat producers received a price of P3C for wheat in the early 1800s.
Advertising can impede economic efficiency when it:
A. increases entry barriers. B. reduces brand loyalty. C. enables firms to achieve substantial economies of scale. D. increases consumer awareness of substitute products.