Question

new cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline falls and auto-workers receieve lower wages

Answer 1

Going by the logic that, new cars are normal goods, it is safe to assume that, the price of those cars would fall if it were to be that the price of gasoline falls and as well as the auto-workers receive lower wages.

This is because, the relation between the two factors are directly proportional to each other. For example, if the auto-workers wage were $100 per 100 and it was subsequently reduced to $40 per hour, the overhead cost would drastically be reduced.

Step-by-step explanation: