New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline?

July 20th, 2010 | by admin |
Alyssa asked:


I’m stuck on this question in my economics homework can anyone please help?
Thanks, Alyssa

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages and automobile insurance becomes more expensive?

A. Price will rise.
B. Price will fall.
C. Price will stay exactly the same.
D. The price change will be ambiguous.

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  • Once you know the wholesale price, less repair costs and expenses, you will know how much you can
  • Once you know the wholesale price, less repair costs and expenses, you will know how much you can

    1. No Responses to “New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline?”

    2. By Aron on Jul 22, 2010 | Reply

      The supply decreases so prices rise and less quantity supplied.

    3. By kaps on Jul 23, 2010 | Reply

      The effect will be prices will fall.

    Sorry, comments for this entry are closed at this time.