Uncertain on what to do to solve the problems The following calculator shows the demand curve for sedans (for example, Toyota Camrys orHonda Accords) in New York City. For simplicity, assume that all sedans are identical and sell forthe same price. Initially, the calculator shows market demand under the following circumstances:Average household income is $50,000 per year, the price of a gallon of regular unleaded gas is $4per gallon, and the price of a subway ride is $2.00.Use the graph input tool to help you answer the following questions. You will not be graded on anychanges you make to this graph.Note: Once you enter a value in a white field, the graph and any corresponding amounts in eachgrey field will change accordingly. Please consider changing the numerical values for each shifterby 1-2 units for the graph functionality to work properly.PRICE (Thousands of dollars per sedan)3020Demand for SedansDemand0 100 200 300 400 500 600 700 800 900QUANTITY (Sedans per month)Graph Input ToolDemand for SedansPrice of asedan(Thousandsof dollars)QuantityDemanded(Sedans permonth)Demand ShiftersAverageIncome(Thousandsof dollars)Price of Gas(Dollars pergallon)Price of aSubway Ride(Dollars)204505042Consider the graph. Suppose that the price of a sedan decreased from $25,000 to $20,000. Thiswould cause aV the demand curve.An increase in average income causes a rightwardthe demand curve;therefore, you may conclude that sedans aregood. (Hint: Try substitutingdifferent values for Average Income in the calculator and observing what happens.)Suppose that, due to a decrease in the supply of gasoline, the price of a gallon of gas rises from $4to $5. Because sedans and gasoline arean increase in the price of a gallon ofgas shifts the demand curve for sedans to the

The supply-demand connection is significant because it determines the pricing and quantity of most…

The following calculator shows the demand curve for sedans (for example, Toyota Camrys or Honda Accords) in New York City. For simplicity, assume that all sedans are identical and sell for the same price. Initially, the calculator shows market demand under the following circumstances: Average household income is $50,000 per year, the price of a gallon of regular unleaded gas is $4 per gallon, and the price of a subway ride is $2.00. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Please consider changing the numerical values for each shifter by 1-2 units for the graph functionality to work properly. 30 8 PRICE (Thousands of dollars per sedan) o e Demand for Sedans Demand 0 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) Graph Input Tool Demand for Sedans Price of a sedan (Thousands of dollars) Quantity Demanded (Sedans per month) Demand Shifters Average Income (Thousands of dollars) Price of Gas (Dollars per gallon) Price of a Subway Ride (Dollars) 20 450 50 4 2 Consider the graph. Suppose that the price of a sedan decreased from $25,000 to $20,000. This would cause a the demand curve. An increase in average income causes a rightward the demand curve; therefore, you may conclude that sedans are good. (Hint: Try substituting different values for Average Income in the calculator and observing what happens.) Suppose that, due to a decrease in the supply of gasoline, the price of a gallon of gas rises from $4 to $5. Because sedans and gasoline are an increase in the price of a gallon of gas shifts the demand curve for sedans to the

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 4TY: The following table summarizes information about the market for principles of economics textbooks:...