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An article in the Wall Street Journal on the recreational vehicle (RV) Industry listed several factors that led to a larger quantity of RVs sold. Briefly explain whether each of these factors caused a movement along the demand curve for RVs or a shift in demand curves for RVs. If you believe the demand curve shifted, Explain whether the curve shifted to the right or to the left.

A. Increase confidence among households - Shift Right
B. Low-interest banks - Movement Along Demand Curve
C. Falling gasoline prices - Movement Along Demand Curve
D. 'Glamping' trend - Shift Right

User Msgre
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Final answer:

Increased consumer confidence and the 'glamping' trend cause the demand curve for RVs to shift to the right, indicating higher demand at all prices. Low-interest rates and falling gasoline prices cause a movement along the demand curve for RVs, reflecting changes in the quantity demanded but not in willingness to pay.

Step-by-step explanation:

Factors such as an increase in consumer confidence, the emergence of the 'glamping' trend, low-interest rates, and falling gasoline prices can affect the demand for RVs. An increase in consumer confidence, or households feeling more financially secure, typically leads to an increase in spending on recreational goods like RVs. This represents a shift in the demand curve to the right because consumers are willing to buy more RVs at every price. Similarly, the rise of the 'glamping' trend, which is a preference for glamorous camping, also causes the demand curve for RVs to shift to the right, as more people want RVs for this fashionable outdoor experience.

Conversely, changes such as low-interest rates by banks and falling gasoline prices do not shift the demand curve but instead cause a movement along the demand curve. Lower interest rates make financing an RV purchase more affordable, increasing the quantity demanded without changing the willingness to pay different prices, and thus, depicting a movement along the demand curve. Similarly, falling gasoline prices make operating an RV cheaper, also leading to a movement along the demand curve as people are more likely to use RVs when it is less expensive to do so.

User Allan Pereira
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