ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Remain the same
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Rise
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Fall
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None of the above
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Detailed explanation-1: -As we can see on the demand graph, there is an inverse relationship between price and quantity demanded. Economists call this the Law of Demand. If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases.
Detailed explanation-2: -Due to an increase in the price of petrol with constant price of cars, consumers would be less inclined to buy cars. This is a situation of decrease in the demand or a backward shift in the demand curve.
Detailed explanation-3: -Answer: With increase in prices of petrol, the demand curve for cars will shift towards the left ( change in demand) as petrol and cars are complementary goods.
Detailed explanation-4: -A shortage of parts, particularly computer chips, caused automakers to scale their production back far below the demand for new vehicles, and push potential new car buyers, even rental car companies, into the used car market.