When Incomes Are Rising,new Car Sales Increase While Used Car

question 159

Multiple Choice

When incomes are rising,new car sales increase while used car sales decrease.This indicates that

• A)used cars and new cars are both normal goods.
• B)used cars are inferior goods and new cars are normal goods.
• C)used cars and new cars are complements.
• D)used cars and new cars are substitutes.
• E)used cars are normal goods and new cars are inferior goods.

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Definitions:

Quantity Supplied

The amount of a commodity that producers are willing to sell at a given price over a specified period.

Market Equilibrium

A state in which market supply and demand are balanced at a certain price level, leading to economic stability in which the quantity supplied equals the quantity demanded.

Excess Supply

A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price, often leading to a price decrease.

Excess Demand

A situation in which the demand for a product or service surpasses its supply in a market, often leading to price increases.