If The Cost Of Gasoline Increases Sharply And Continues To Rise, How Does This Development Affect The Demand Curve For Cars? (2024)

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If The Cost Of Gasoline Increases Sharply And Continues To Rise, How Does This Development Affect The Demand Curve For Cars? ›

Expert-Verified Answer

Answer and Explanation:

An increase in consumer income, assuming gasoline is a normal good because when the consumer's income increases, it will increase the consumption of the consumer and will always shift the demand curve to the right.

Answer and Explanation:

If the price of automobiles were to increase, the quantity demanded for gasoline will decrease since the sales of automobiles will likely go down.

The demand for gasoline is relatively price inelastic because there are no immediate alternatives that can be easily substituted. In conclusion, the factor affecting elasticity that explains why a person may continue to purchase gasoline even though the price rises sharply is inelastic demand.

Expert-Verified Answer

An increase in the price of gasoline will cause the demand curve for tires to shift to left because gasoline and tires are complements.

The law of supply and demand combines two fundamental economic principles describing how changes in the price of a resource, commodity, or product affect its supply and demand. As the price increases, supply rises while demand declines. Conversely, as the price drops supply constricts while demand grows.

In this case, cars and gas are complementary goods because they both are used together by the consumer, so, if prices of gas rise, the demand of cars will decrease because some consumers will not be able to afford high prices of gas and because gas and cars are complementary goods, consumers will decrease the demand of ...

Gasoline and cars are complementary goods because they are used together. If there is an increase in the price of gasoline, the demand for cars will decrease. This will shift the demand curve for cars to the left, leading to a decrease in the equilibrium price and quantity of cars.

As we can see on the demand graph, there is an inverse relationship between price and quantity demanded. Economists call this the Law of Demand. If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases.

Is gasoline a normal good? ›

The demand for normal goods increases as income rises, while the demand for inferior goods increases as income falls. Normal goods are things like movie tickets, gasoline, and shoes. If you make more money, you buy more normal goods. Inferior goods are things like beans, bologna, and bus tickets.

Goods and services often work together. For example, a consumer who purchases gasoline for their car also pays for the processing and transportation of that gasoline. In this case, the gasoline is the good and the processing and transportation is the service.

A Demand Curve for Gasoline. The demand schedule shows that as price rises, quantity demanded decreases, and vice versa. These points are then graphed, and the line connecting them is the demand curve (D).

Thus, the demand curve for gasoline shifts due to a change in the expected future price of gasoline. A change in today's gasoline prices will move the quantity along the same demand curve and not shift the demand curve. A change in the number of sellers of gasoline will decrease or increase the prices of gasoline.

If people expect prices to go up, they're more likely to buy now, shifting the demand curve to the right. If they expect prices to go down, they're likely to hold off on buying, shifting the demand curve to the left.

Answer and Explanation:

If there's a public announcement on TVs that encourage people to walk or ride bicycles rather than driving cars, this means that people will use cars less often. As a result, the demand for gasoline will decrease, causing the demand curve to shift to the left.

Answer and Explanation:

Similarly, a decrease in consumers' incomes, decrease in the expected future prices, decrease in the prices of substitute goods, etc., shifts the demand curve to the left. Thus, the demand curve for gasoline shifts due to a change in the expected future price of gasoline.

If the cost of production is lower, the profits available at a given price will increase, and producers will produce more. With more produced at every price, the supply curve will shift to the right, meaning an increase in supply.

If consumer income goes up The demand curve shifts to the right. Is consumer income goes down the the demand curve shifts to the left. If goods are more fashionable than the demand curve shifts outwards. If good to go out of fashion in the demand curve shifts inwards.