I’m stuck on this question in my economics homework can anyone please help?
Thanks, Alyssa
New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages and automobile insurance becomes more expensive?
A. Price will rise.
B. Price will fall.
C. Price will stay exactly the same.
D. The price change will be ambiguous.
Increase in price of gasoline, cheaper public transportation, lower wages leads to lower demand. cheaper steel prices will lead to lower cost of production. so the effect will be B prices will fall
A
because the supply decreases
so prices rise and less Quantity supplied
References :
Increase in price of gasoline, cheaper public transportation, lower wages leads to lower demand. cheaper steel prices will lead to lower cost of production. so the effect will be B prices will fall
References :