Give senarios will shift supply in the market for gaspowered

Give senarios will shift supply in the market for gas-powered automobiles. Briefly answer the following questions for each scenario.

(a) Which of the supply shifter variables (SPENT) is affected?

(b) Will supply increase or decrease as a result of the change.

(c) Which way does the supply cure shift (right or left)?

(d) Assuming demand remains the sames, what happens to equilibrium price and quantity after the shift? Will they increase or decrease?

Give scenarios for the following:

Scenario #1: A new machine makes producing cars quicker and easier.

Scenario #2: Congress passes a law which requires car manufacturers to reduce emisions during the manufacturing process.

Scenario #3: A large firm goes bankrupt and closes.

Scenario #4: Car manufacturers except the price of cars to fall next month.

Solution

1. Technology. The supply of the cars increases because the firms try to produce more at the efficient technology. The supply curve will shifts to the right, if the demand remains the same this will reduce the equilibrium price and increase the quantity of output.

2. Government policy. This new reduces the supply of the commodity and the supply curve shifts to the left, if the demand remains the same the equilibrium price will rise and there will be a decline in the output produced.

3. Number of sellers. The supply will decrease and the supply curve will shift to the left and this results in a higher equilibrium price and reduced output.

4. Expectations. The expectation makes the car manufacture to produce more and sell at this month\'s price so there is an increase in the supply and the supply curve will shifts to the right and if the demand remains the same the equilibrium price will reduce and the quantity of output will increase.