Final answer:
It is generally expected under the laws of supply and demand that the price of cars would decrease if there are fewer purchases being made. However, this is dependent on 'all other things being equal' which is not always the case in real-world scenarios. Various factors can influence this such as producer costs, market competition, or external economic conditions.
Step-by-step explanation:
The subject of your question is economics, specifically the theory of supply and demand. Determining if the price of cars should decrease because of a drop in purchases is tied to ceteris paribus, an economic principle that means 'all other things being equal'.
According to the laws of supply and demand, if demand for a product drops (fewer cars being purchased) and all other conditions in the market remain the same (ceteris paribus), we can generally expect the price to drop as sellers attempt to stimulate demand. However, many factors can potentially influence this outcome such as producer costs, market competition, and external economic conditions.
For instance, if the reduction in car purchases is due to a decrease in consumer income, manufacturers might also decrease production, which can effectively counterbalance the initial demand reduction. Also, if there are restrictions like a pandemic that stifle operations, businesses might adjust their investment expenditure which can have an impact on the price.
Learn more about Supply and Demand