Question

Peter studies the demand curve of Sydney consumers of BMW cars. He has data for the 2014-16 period but is unsure how to analyse it and so asks for your help.

Select the item from the list provided to make the following statements true.

The quantity demanded for BMW cars fell in 2014. If demand was unchanged, this was because the price __________.

If the price fell in 2015 for BMW cars, ceteris paribus, how would an economist describe what happens in relation to the demand curve? There would be __________.

If the price increases in 2016, but is lower than at the start of 2014, then the quantity demanded for BMW cars in 2016 compared to 2014 would have __________.

1.

Movement up and along the demand curve

2.

Increased

3.

Not equal

4.

Shift to the left of the demand curve

5.

Decrease

6.

Decrease in demand

7.

Shift right of the demand curve

8.

Shift left of the supply curve

9.

Movement both up and down along the demand curve

10.

Movement down and along the demand curve

11.

Not enough information to know

12.

Nothing has changed

Answer 1

(Answer:

Peter studies the demand curve of Sydney consumers of BMW cars. He has data for the 2014-16 period but is unsure how to analyze it and so asks for your help.

Select the item from the list provided to make the following statements true.

The quantity demanded BMW cars fell in 2014. If demand was unchanged, this was because of the price movement up and along the demand curve. (As demand was unchanged only possible movement is along the demand curve).

If the price fell in 2015 for BMW cars, ceteris paribus, how would an economist describe what happens in relation to the demand curve? There would be Shift to the left of the demand curve.

If the price increases in 2016, but is lower than at the start of 2014, then the quantity demanded BMW cars in 2016 compared to 2014 would have Not enough information to know. ( As we do not know what happen to our demand curve. It is possible that the demand curve has been shifted left and we have lower price as well as low quantity demanded. Or a rightward shift in the supply curve would have left us to low prices and high quantity demand.)