Question
What immediate effect will each of the following have on demand for car tires (under the assumption that other things equal)? a. An increase in
What immediate effect will each of the following have on demand for car tires (under the assumption that other things equal)?
a. An increase in the income of potential buyers.
b. An increased preference for using public transportation.
c. A fall in the price of rubber used to make tires.
d. A decline in the price of the large tires used for trucks (with no change in the price of car tires) (hint: base your argument on the relationship between automobiles and trucks - are they substitutes or not?)
e. The levying of a per-unit tax on each auto tire bought.
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