Effect of each on a demand curve for auto purchases in Japan
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The demand in Japan for new automobiles is elastic and sensitive to market prices. Given that, describe the effect of each of the following on the quantity demanded or the demand for new autos in Japan. Indicate whether the effect of each is an upward or downward movement along a given demand curve or instead involves an outward or inward shift in the demand curve for new autos. Explain your answers.
a. A decrease in the average price of new Japanese automobiles.
b. A fall in Japanese interest rates.
c. A rise in the price of public transportation in Japan.
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Effect of each on a demand curve for auto purchases in Japan
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a. A decrease in the average price of new Japanese automobiles.
Decrease in price implies demand goes up; this is an upward movement along the demand curve. There is no external forces that changes the demand curve (i.e. people's demands remain the same). Once the price increases, quantity demanded will go back to the original level. (If there doesn't seem too clear, read on to the next part).
b. ...
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