Intro to Macroeconomics Chapter 3

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What effect will each of the following have on the demand for small automobiles such as the Honda Civic or Ford Focus? LO3.2

-A supply schedule or curve shows that, other things equal, the quantity of a good supplied varies directly with its price.

-The supply curve shifts because of changes in

(a) resource prices

(b) technology

(c) taxes or subsidies

(d) prices of other goods

(e) expectations of future prices

(f) the number of suppliers.

-A change in supply is a shift of the supply curve; a change in quantity supplied is a movement from one point to another on a fixed supply curve.

Questions

1.Income declines and small autos are an inferior good.

2.Consumers anticipate that the price of small autos will greatly come down in the near future.

Y7

3.The price of gasoline substantially drops.