Question

In answering the next ten questions, please determine the effect on the equilibrium price and quantity of gasoline-powered automobiles produced in the U.S. A: The Federal Reserve raises interest rates. B. War escalates in the Mideast. C. The Federal government provides generous tax credits for the purchase of electric automobiles. D. The UAW successfully a 5% wage increase and labor productivity increases by 6%. E. Incomes increase across the board F. A pollution tax is levied on the production of automobiles with internal combustion engines. G. A tariff is placed on imported automobiles. H. A quota is placed on imported automobiles. I. A significant pollution tax is placed on Air travel in the U.S. J. Amtrak ceases operation 14. A occurs alone 15. B occurs alone 16. H occurs alone 17. I occurs alone 18. D occurs alone 19. A & B occur simultaneously 20. F & I occur simultaneously 21. H & I occur simultaneously. 22.I & J occur simultaneously. 23. C & D occur simultaneously

Answer 1

14. Equilibrium quantity will decrease, change in price cannot be determined

Higher interest rates will increase both manufacturers and consumers cost. Decreasing both supply and demand of gasoline powered automobiles.

15. Equilibrium price will increase equilibrium quantity will decrease.

A war in the Midwest will lead to to decrease in supply this decrease in supply I will increase the price and decrease the quantity of gasoline powered automobiles.

16. Equilibrium price will increase equilibrium quantity will decrease.

Import and import quota is effectively a decrease in supply of automobiles this decrease in supply increase equilibrium price.

17. Equilibrium price will increase equilibrium quantity will increase.

Pollution tax on air travel will increase the cost of air travel. This will in turn increases the demand for gas power automobiles. This increase in demand will lead to an increase in price as well as quantity