Determine what happens to the Price and Quantity of the following:
Price of Gasoline has been decreasing. What will happen to the market of automobiles (cars)?
Consider the following points as tips for answering the question.
1. Has there been an increase or decrease in demand? Factors that could shift the demand curve include changes in preferences, changes in income, changes in the price of substitutes or complements, or changes in the number of consumers in the market.
2. Has there been an increase or decrease in supply? Factors that could shift the supply curve include changes in costs of materials, wages, or other inputs; changes in technology; or changes in the number of firms in the market.
3. Draw a supply-and-demand graph to explain this change. Be sure to label your graph and clearly indicate which curve shifts.
Note: Provide 3 to 4 pages long for a a higher points. Anything less will earn less points.
