Some people will often remark that the used car market is a counter-cyclical business,meaning that the fortunes of the business tend to move in the opposite direction of the health of the economy
Why might this be true and what conclusion can you make about what kind of a good used cars would be classified as economically speaking?
What they probably mean is that when the economy is moving into a recession people tend to move away from the purchase of new cars and will purchase more used cars instead. Likewise, during an economic boom or expansion customers now have more income and are more motivated to purchase new cars and substitute away from used cars. Essentially the conclusion you can make is that used cars are considered to be an inferior good.
You might also like to view...
Annie's Breakfast Corner charges $5.00 per meal. Annie's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies, and business license average out to $1.25 per meal. Since the market is highly competitive, Annie should: a. raise her prices above the level set by the market
b. keep the business open in the short run but plan to close the business in the long run. c. keep the business open in the short run and plan to expand the business in the long run. d. lay off her staff, break her lease, and close the business immediately.
The attempt to force employers to use more labor than they otherwise would, or to force employers to use labor inefficiently, is known as
A) a secondary boycott. B) a sympathy strike. C) a monopsony. D) featherbedding.