(A) Assume there is an increase in the price of electricity (which is the result of a decrease in the supply of electricity), and electricity and natural gas are substitutes. How would this affect the demand for natural gas, and what would happen to the equilibrium price and quantity of natural gas?                                                                                                                                         

(B) "In the past five years the average price of our Chevrolets has risen about 6 percent a year, and each year we have sold 10 percent more cars than the previous year." How can this car dealer sell more cars as the price of the cars increases?                                                                                               

(C) Using a change in supply and/or demand, explain the following phenomena:

1. All else constant, gasoline prices are higher in summer than winter months.
2. At the same time that the quality of personal computers has been increasing, the price of personal computers has been falling.

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A Two goods are said to be substitute if increase decrease in price of one good increases decreases the demand for other goods Substitute means the co... View the full answer