Question

Assume that the health insurance premiums of auto workers increase. What will happen in the market for automobiles? a. The supply of automobiles will shift to the left. b. The quantity supplied of automobiles will decrease. c. The supply of automobiles will increase. d. The quantity supplied of automobiles will increase.

Answer 1

a. The supply of automobiles will shift to the left.

Step-by-step explanation:

Labor is an input in car production. If the price of employee health insurance rises, this is a cost to the auto industry that will be passed on to the price of cars. Thus, In a graph where the price is on the Y axis and the quantity supplied on the X axis, the car supply curve tends to shift to the left, representing an increase in cars. The same amount of cars provided will be priced higher.