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Ford Motor Company announces that it will offer $1,500 rebates on new Mustangs starting next month. As a result of this information, today's demand curve for Mustangs

Answers:
A.
shifts to the right.

B.
shifts to the left.

C.
shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information.

D.
will remain the same.

1 Answer

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Final answer:

The correct answer is A .The announcement of $1,500 rebates on new Mustangs by Ford Motor Company will shift today's demand curve for Mustangs to the right, due to the increase in demand.

Step-by-step explanation:

When Ford Motor Company announces that it will offer $1,500 rebates on new Mustangs starting next month, this means that the overall value proposition of Mustangs increases for consumers.

According to economic principles, an increase in value or a decrease in price—such as a rebate—typically causes an increase in demand.

This scenario is illustrated by the given information which indicates that an increased demand at every given price results in the demand curve shifting to the right.

In this specific situation, such an announcement will create an expectation for a lower effective price in the future, leading to an increase in demand today as consumers wait for the lower prices .

Hence, today's demand curve for Mustangs will shift to the right, which is option A.

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