The reason behind the rightward shift in the demand curve.

Question

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Answer 1

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

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Students have asked these similar questions

(KEY QUESTION) Consider the market for station wagons. For each of the events listed below,identify which of the determinants of demand or supply are affected. Also indicate whether demandor supply is increased or decreased.a. People decide to have more children.b. The price of mini-vans rises.c. A strike by steelworkers raises steel prices.d. Engineers develop new automated machinery for the production of station wagons.e. A stock market crash lowers people's wealth.f. IMPORTANT: In all the above cases, is the change in equilibrium quantity less, more, orequal to the initial change in demand or supply? Why is this? (recall our discussion in thelectures, you can check slides 3-6 from week 5 or the lecture recordings.g. IMPORTANT: Now assume the changes in parts a. and c. happen simultaneously. Show themon the diagram and explain what will/may happen to the equilibrium price and quantity (Iencourage you to try this for combinations of the other changes too)

(KEY QUESTION) Consider the market for station wagons. For each of the events listed below,identify which of the determinants of demand or supply are affected. Also indicate whether demandor supply is increased or decreased.a. People decide to have more children.b. The price of mini-vans rises.c. A strike by steelworkers raises steel prices.d. Engineers develop new automated machinery for the production of station wagons.e. A stock market crash lowers people's wealth.f. IMPORTANT: In all the above cases, is the change in equilibrium quantity less, more, orequal to the initial change in demand or supply? Why is this? (recall our discussion in thelectures, you can check slides 3-6 from week 5 or the lecture recordings.g. IMPORTANT: Now assume the changes in parts a. and c. happen simultaneously. Show themon the diagram and explain what will/may happen to the equilibrium price and quantity (Iencourage you to try this for combinations of the other changes too) PLEASE ANSWER SUBQUESTIONS D…

(KEY QUESTION) Consider the market for station wagons. For each of the events listed below,identify which of the determinants of demand or supply are affected. Also indicate whether demandor supply is increased or decreased.d. Engineers develop new automated machinery for the production of station wagons.e. A stock market crash lowers people's wealth.f. IMPORTANT: In all the above cases, is the change in equilibrium quantity less, more, orequal to the initial change in demand or supply? Why is this? (recall our discussion in thelectures, you can check slides 3-6 from week 5 or the lecture recordings.g. IMPORTANT: Now assume the changes in parts a. and c. happen simultaneously. Show themon the diagram and explain what will/may happen to the equilibrium price and quantity (Iencourage you to try this for combinations of the other changes too)

Answer 2

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

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Answer 3

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Answer 6

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Answer 7

Chapter P2, Problem 1KC

To determine

The reason behind the rightward shift in the demand curve.

Answer 8

Expert Solution & Answer

Answer to Problem 1KC

Option 'b' is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Option (b):

When the price of the auto insurance falls, it leads to an increase in the demand for the autos. This is because the auto insurance is mandatory for taking the auto and when the insurance price decreases, it increases the real money balance and causes a rightward shift in the demand curve. This means option 'b' is correct.

Option (a):

When everything else remains the same, an increase in the price of a commodity will lead to a decrease in the demand for the same. Thus, when the price falls here, the demand will increase but will lead to a movement along the same demand curve and not a shift. It means that option 'a' is incorrect.

Option (c):

The fall in the consumer income decreases the real income of the consumer and as a result, the demand curve will shift inward, and it will be depicted by a leftward shift in the demand curve. This indicates that option 'c' is also incorrect.

Option (d):

The fall in the price of steel would decrease the production cost of autos. When the cost of production decreases, the price will decrease making an increase in demand that leads to a movement along the same demand curve. Since the change in the price of steel causes a movement along the same curve and not a shift, option 'd' is incorrect.

Answer 12

Economics Concept Introduction

Market: The market is the place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the two at a mutually agreed price level. The demand is done by the consumers, whereas the supply is done by sellers.

Answer 13

Ch. P2 - Prob. 1KC Ch. P2 - Prob. 2KC Ch. P2 - Prob. 3KC Ch. P2 - Prob. 4KC Ch. P2 - Prob. 5KC Ch. P2 - Prob. 6KC Ch. P2 - Prob. 7KC Ch. P2 - Prob. 8KC

The reason behind the rightward shift in the demand curve.

The reason behind the rightward shift in the demand curve.

Answer to Problem 1KC

Explanation of Solution

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Chapter P2 Solutions