Hypothetical demand curve for hybrid vehicles, Business Economics

Equation (1) gives a hypothetical demand curve for hybrid vehicles in the United States during the year 2000, where Q is the quantity demanded and P is the price.  Equation (2) gives a hypothetical supply curve for hybrid vehicles in the United States for the same time period, where Q is the quantity supplied and P is the price.

(1)  P = -0.01Q + 40,000 

(2)  P = 0.0025Q + 10,000 

a) Draw both the demand and supply curves on the same graph, with price (P) on the vertical axis and quantity (Q) on the horizontal axis, on your own sheet of paper to assist in answering (b) and (c). 

b) Find the equilibrium price P* and quantity Q*.  Using what you know about what supply and demand curves represent, explain why P* and Q* are the equilibrium price and quantity for the hybrid vehicle market in the United States for 2000.

c) For the following scenarios, describe graphically what will happen (if anything) to the demand and/or supply curves for hybrid vehicles.  Justify your response in words.  Determine whether the equilibrium price and quantity will be greater or less than the equilibrium price and quantity in part

(b).

i) Toyota finds a cheaper way to manufacture their unique hybrid engine in the Prius. 

ii) The U.S. Congress discontinues a tax credit for the purchase of hybrid and alternative fuel vehicles. 

iii) The price of gasoline at the pump falls from $3.50/gallon to $2.50/gallon. 

iv) Consumer Reports publishes poor crash-test ratings on the Honda Civic hybrid. 

v) General Motors makes available the new Chevy Volt, which they claim gets 230 miles per gallon, considerably better than the Prius's 45 miles per gallon. 

vi) Mercedes Benz increases the price of the SLR McLaren Roadster from $500,000 to $550,000.

Posted Date: 3/19/2013 2:23:19 AM | Location : United States







Related Discussions:- Hypothetical demand curve for hybrid vehicles, Assignment Help, Ask Question on Hypothetical demand curve for hybrid vehicles, Get Answer, Expert's Help, Hypothetical demand curve for hybrid vehicles Discussions

Write discussion on Hypothetical demand curve for hybrid vehicles
Your posts are moderated
Related Questions

Define advocates of the International Monetary Fund argue. Advocates of the International Monetary Fund (IMF) argue • Competitive devaluations were a characteristic of the i

Define the balance of payments problem in international capital flows. Balance of payments (BoP): It inflows capital as like: • Foreign direct investment (FDI) into machiner

What is social inclusion? Social Inclusion: Social inclusion implies the whole of society enjoys the advantages of economic activity (as income) and have complete access

Is structural change a problem? Economies are dynamic and adapt to meet evolving consumer wants needs. This means resources are moved from use to use in response to, say, chan

Think of circumstances at home, at work, at university or into a club to which you belong. This is a situation which involves you. You want to modify the present circumstances and

(i) Explain the term capital accumulation. (ii) Explain the different views on economic development. (iii) In the golden age of globalization countries, especially develop

Numerical Exercise 11. Suppose that the Fed’s inflation target is 2 percent, potential output growth is 3.5 percent, and velocity is a function of how much the interest rate differ

If the Government decreases the interest rates on capital goods such as new plant and equipment and building. Investment also include spending on working capital such as stocks of

Examine the factors that determine the price of computers in a free market. In recent years, the price of personal computers has continued to fall even in the face of increasing de