Match the non-price determinant (the 'cause') with the correct effect on the market for cars, ceteris paribus (assuming everything else remains the same).
1: Non-price determinant: Imagine new technology is invented that makes the cost of producing cars much lower. ____
2: Non-price determinant: Imagine the population increases ____
3: Non-price determinant: Imagine many new cycling tracks are built, making it much more pleasant to ride bicycles around the city. ____

Question

BlackTom AI · Accepted Answer

We start by identifying what each non-price determinant does to the market for cars, keeping all else constant (ceteris paribus).

Option 1: 'Non-price determinant: Imagine new technology is invented that makes the cost of producing cars much lower.' This is a technological improvement that reduces production costs, which shifts the supply curve to the right (an increase in supply). With more cars supplied at every price, the equilibrium quantity traded increases and the equilibrium price falls. The core idea is that lower costs enable producers to offer more cars without raising price.

Option 2: 'Non-price determinant: Imagine the population increases.' A larger population generally means more potential buyers for cars, so the demand for cars increases. This shifts the demand curve to the right, resulting in a higher equilibrium price and a higher equilibrium quantity traded as more people want to buy cars.

Option 3: 'Non-price determinant: Imagine many new cycling tracks are built, making it much more pleasant to ride bicycles around the city.' Safer, nicer cycling infrastructure makes cycling more attractive relative to driving, reducing the desirability or perceived need for cars. This leads to a decrease in demand for cars, shifting the demand curve to the left. The consequence is a lower equilibrium price and a lower equilibrium quantity traded, all else equal because fewer shoppers want to buy cars at each price.

Putting it together, the associations are: the production-cost tech improvement corresponds to an increase in supply (lower price, higher quantity), population growth corresponds to an increase in demand (higher price, higher quantity), and more cycling infrastructure corresponds to a decrease in demand (lower price, lower quantity). Each option is matched with the effect that best captures the social and economic impact of the determinant described.

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