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In the scenario of the number of people driving SUVs decreasing, what is changing: demand or quantity demand?

A. Demand
B. Quantity Demand
C. Both
D. Neither

User Alif
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1 Answer

3 votes

Final answer:

The decrease in the number of people driving SUVs affects the quantity demanded, signifying a movement along the demand curve. Similarly, a price ceiling does not shift demand or supply curves; rather, it creates a shortage by setting a maximum price below the market equilibrium.

Step-by-step explanation:

In the scenario where the number of people driving SUVs is decreasing, what is changing is the quantity demanded, not the demand itself. This indicates a movement along the demand curve due to a change in the price or cost associated with driving an SUV. If non-price factors were changing, like income, preferences, or price of related goods, that would shift the demand curve. In response to a price ceiling, the correct answer is that a price ceiling does not usually shift demand or supply, so the answer is (d) neither. A price ceiling is a maximum price set by the government and it causes a shortage by keeping prices below the equilibrium, but the actual demand and supply curves do not shift; instead, the quantity supplied decreases and the quantity demanded increases at the set ceiling price, leading to excess demand.

User Mike Gray
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