Consumers anticipate that the price of small autos will greatly come down in the near future. The price of gasoline substantially drops.

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

  • 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. Consumers anticipate that the price of small autos will greatly come down in the near future.
  2. The price of gasoline substantially drops.
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