Question

Annabelle typically drives her car to work. but she only lives one mile from work and is willing to ride her bike instead. if the price of a bike falls, what would happen in the market for cars?

Answer 1

If the price of a bike falls in the market, then demand for the cars also falls.

This is a simple logical answer.

The substitute for the car in market is Bike. If prices of cars increases, people will move towards the substitute. Similarly, if the prices of bikes fall in a market, more people will move from car to bikes. Thus the demand for cars decreases. People will move towards the less costly mode of travelling.

Answer 2

What would likely be an answer to the question is that if the bike has decreased in regards to its price, then the demand for cars would likely be decreased. It is because of the fact that the car has been substituted to another thing which is more cheaper than the car which makes the car to have a decreased in demand.