3. Demonstrate, using supply and demand analysis, the effect on the equilibrium price and quantity of new hybrid automobiles when the following occurs. Using graphs similar to the notes in Week One, describe the change in the equilibrium price and quantity, and explain your answer. Is the equilibrium price higher or lower, or is the change indeterminate? Is the equilibrium quantity higher or lower, or is the change indeterminate?
a. Incomes increase
b. Interest rates decrease
c. The price of batteries used in the production of these vehicles decreases
d. price of gasoline decreases
4. Determine if the demand for the following products is price elastic or price inelastic, and explain your answer.
a. Box of cereal sold in a grocery store
b. Gasoline as a commodity
c. Gasoline sold at a local gasoline station
d. Fast food sold at a restaurant
e. Hotel rooms for people planning a vacation
f. Hotel rooms for people on business to meet an important client
g. Clothes sold in a discount retailer
i. Fresh peas
j. Major League Baseball tickets
The effect on the equilibrium price and quantity of new hybrid automobiles is depicted.