Question Economics Assignment Q 1. Explain the income effect and how it leads to a downward sloping demand curve. 2. Explain the substitution effect and how it leads to a downward sloping demand curve. 3. Describe how the downward slope of the demand curve can be explained by the principle of diminishing marginal utility. 4. Explain how a change in price affects the demand for a product's substitute. 5. Explain how a change in price affects the demand for a product's complement. 6. Labor unions across the nation have recently negotiated higher wages for 80% of America's workers. Explain what will happen to demand in the market for new automobiles. Show a market demand curve for next automobiles and the effect of the increase in wages. 7. Recently prices of gasoline, a compliment to new automobiles, have doubled. Explain what will happen to demand in the market for new automobiles. Show a market demand curve for new automobiles and the effect of the increase in the price of gas. 8. Recently the prices of used automobiles, which are substitutes for new automobiles, have increased by 50% show a market demand curve for new automobiles and the effect of the increase in the price of used automobiles. 9. Congress has recently lowered the driving age from 16 to 12. Show a market demand curve for new automobiles and the effect of the lowered driving age.