Automobiles And The Economy
Given the products below and the events that affect them, indicate what happens to demand or supply, and the ?
(a)Digital cameras. There are improvements in the technology that increase the economic efficiency of production.
(b)Automobiles. Consumer incomes rise as the economy moves out of recession.
(c)Beef. Chicken prices fall because of a decline in the cost of feeding chickens.
(d)Fast-food meals. The government imposes a significant tax on fast-food meals.
(a) efficiency up => costs of production down => price down => demand up…
(b) incomes up => demand up => price up => supply up…
(c) substitute price down => demand for beef down => beef prices down => demand for beef up…
(d) tax on the product up => price (money paid) up => demand down => price down…
“…” implies that the process continues further untill the equilibrium is reached. But is there one?
World: Reporter’s Notebook: The Cars of Dubai
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