The demand for used cadillacs will decline as people

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the demand for used Cadillacs will decline, as people in the market for cars will not find Cadillacs as attractive. In addition, some people who already own Cadillacs will try to sell them. The result is that the demand curve for used Cadillacs shifts to the left, while the supply curve shifts to the right, as shown in Figure 9. The result is a decline in the equilibrium price of used Cadillacs. 25
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Figure 8 Figure 9 2. The statement that "an increase in the demand for notebooks raises the quantity of notebooks demanded, but not the quantity supplied," in general, is false. As Figure 10 shows, the increase in demand for notebooks results in an increased quantity supplied. The only way the statement would be true is if the supply curve was a vertical line, as shown in Figure 11. 26
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Figure 10 Figure 11 3. a. If people decide to have more children (a change in tastes), they will want larger vehicles for hauling their kids around, so the demand for minivans will increase. Supply won't be affected. The result is a rise in both price and quantity, as Figure 12 shows. Figure 12 b. If a strike by steelworkers raises steel prices, the cost of producing a minivan rises (a rise in input prices), so the supply of minivans decreases. Demand won't be affected. The result is a rise in the price of minivans and a decline in the quantity, as Figure 13 shows. 27
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Figure 13 c. The development of new automated machinery for the production of minivans is an improvement in technology. The reduction in firms' costs results in an increase in supply. Demand isn't affected. The result is a decline in the price of minivans and an increase in the quantity, as Figure 14 shows. Figure 14 d. The rise in the price of sport utility vehicles affects minivan demand because sport utility vehicles are substitutes for minivans (that is, there is a rise in the price of a related good). The result is an increase in demand for minivans. Supply is not affected. In equilibrium, the price and quantity of minivans both rise, as Figure 12 shows. e. The reduction in peoples' wealth caused by a stock-market crash reduces their income, leading to a reduction in the demand for minivans, since minivans are 28
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likely a normal good. Supply isn’t affected. As a result, both price and quantity decline, as Figure 15 shows. Figure 15 4. Technological advances that reduce the cost of producing computer chips represent a decline in an input price for producing a computer. The result is a shift to the right in the supply of computers, as shown in Figure 16. The equilibrium price falls and the equilibrium quantity rises, as the figure shows. Figure 16 Since computer software is a complement to computers, the lower equilibrium price of computers increases the demand for software. As Figure 17 shows, the result is a rise in both the equilibrium price and quantity of software.
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