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According the law of demand curve, when the price of good increases, the quantity demand ususally decrease, it is a downward slope. But about the price and quantity sold of private car in USA, why the demand curve is upward slope, that means the price rises and the quantity demand also increase. does anyone can explain? Thanks a lot.
- STEVIE-G™Lv 71 十年前最愛解答
For the curve linking the price and quantity sold(supply) of private car in USA, it's not the demand curve, it's the supply curve with upward sloping. The reason for supply curve having upward sloping is the firm can make more profit with a higher selling price, so when the price increases, then the firm tends to produce more in order to increase their profit.
- 1 十年前
there is no upward sloping demand curve in real world, therefore 'price rises and the quantity demand also increase' is impossible, it should be 'price rises and the demand also increase'
that means, price increases, demand curve shifts to the right, so demand increases, but not quantity demand
in other word, price increases and quantity supplied increases. This is because when suppliers produce more, according to diseconomies of scale, average cost will increase and so will marginal cost,
When the selling price increases, suppliers are able to produce more as there is higher selling price to cover the increased cost
by the way, increase in price will lead to increase in dmand for car, that means increase in price is induced by other factors other than price, therefore , there will only be increase in demand