Considers the graph that represents the supply and demand in the market for automobiles. For each of the following events, draw the new market outcome, and say whether the equilibrium price and quantity will increase or decrease. Always begin with the market at the original equilibrium. Make sure you label your curves properly.

a. Environmentalists launch a successful One Family, One Car campaign.
b. A steel tariff increases the price of steel.
c. A baby boom occurred 16 years ago.
d. An oil shortage causes the price of gasoline to soar.
e. Improvements in robotics increase efficiency and reduce costs.
f. The government offers a tax rebate for the purchase of commuter rail tickets.

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ignaciomsarmiento ignaciomsarmiento · Answer 1 · 2019-09-25T19:01:52+02:00

Answer:

Please see figures attached

Explanation:

a. If the campaign is successful, this will shift the demand inwards decreasing the demand for cars.

b. A steel tariff increases cost so shifts supply inwards

c. Baby boom 16 years ago increases people demanding car now, thus shifting demand outwards

d. Price in gasoline increases, which is a complement of cars, then demand will shift inwards, people will demand fewer cars.

e. Improvements in robotics reduce costs, Supply shift outwards.

f. A government policy reduces the price of a substitute good (trains) this will generate demand to shift inwards.