contestada

Gasoline prices above $3 per gallon have affected what enterprise rental car co. can charge for various models of rental cars. suvs are $37 with one-day return and subcompacts are $41 with one-day return. why would the equilibrium price of suvs be lower than the equilibrium price of subcompacts?

Respuesta :

MrCreighton

Because gas price increases drive people to rent smaller, more fuel-efficient cars, there would be an increase in demand that would raise the equilibrium price.

After the hike in price of gasoline, consumers would prefer a more fuel efficient car. So, consumers would demand less of SUVs and more of subcompacts. The decrease in demand for SUVS would lead to a fall in equilibrium price while the increase in demand would lead to an increase in the price of subcompacts

Equilibrium price is the price where demand intersects supply.

When there is an increase in demand while supply remains constant, there would be an increase in equilibrium price and quantity.

When there is a decrease in demand while supply remains constant, there would be a decrease in equilibrium price and quantity.

Please check here to learn more about a change in demand: https://brainly.com/question/14456267?referrer=searchResults

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