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Consider the market for minivans. For each of the events listed, identify which of the determinants of demand are affected. Use the demand and supply diagram to identify the effects of this change on

Consider the market for minivans. For each of the events listed, identify which of the determinants of demand are affected. Use the demand and supply diagram to identify the effects of this change on the equilibrium price and quantity exchanged of minivans.
a) People decide to have more children.
This will affect {Tastes and Preferences/Price of complements/Price of substitutes/Expectations about future prices/Income(normal good)/Income(inferior good)} , so demand for minivans will {increase/decrease} , thus the market price of minivans will {increase/decrease} and the market equilibrium quantity will {increase/decrease}.
 
b) The price of station wagons rises.
This will affect {Tastes and Preferences/Price of complements/Price of substitutes/Expectations about future prices/Income(normal good)/Income(inferior good)} , so demand for minivans will {increase/decrease} , thus the market price of minivans will {increase/decrease} and the market equilibrium quantity will {increase/decrease}.
 
c) A recession reduces average family income.
This will affect {Tastes and Preferences/Price of complements/Price of substitutes/Expectations about future prices/Income(normal good)/Income(inferior good)} , so demand for minivans will {increase/decrease} , thus the market price of minivans will {increase/decrease} and the market equilibrium quantity will {increase/decrease}.
 
d) Because of an autoworker strike, people believe that the price of minivans will rise in the future.
This will affect {Tastes and Preferences/Price of complements/Price of substitutes/Expectations about future prices/Income(normal good)/Income(inferior good)} , so demand for minivans will {increase/decrease} , thus the market price of minivans will {increase/decrease} and the market equilibrium quantity will {increase/decrease}.

Apr 19 2021 View more View Less

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