A car dealership in Portsmouth initially had Toyotas, Hondas, Subarus, and Hyundais for sale on site. When his contract with Toyota expired, however, the owner chose not to continue selling Toyotas at his dealership, and he placed all Toyota vehicles in his inventory on clearance sale for as low as half of their starting price. Create a graph to show how the market for Subarus (no, this is not a typo!) among the patrons of this dealership will change as a result of the owner’s decisions. For each shift you depict in your graph, offer a brief justification of why this shift would occur. What conclusions can you draw about how the market price and the quantity supplied/demanded of Subarus will be affected?

Q&A Education