Question

suppose there is a decrease in the u.s. selling price of japanese-made cars (a substitute for american-made cars). at the same time, the price of steel in the u.s., used to make american-made cars decreases. what would we expect would happen in the market for american-made cars? suppose there is a decrease in the u.s. selling price of japanese-made cars (a substitute for american-made cars). at the same time, the price of steel in the u.s., used to make american-made cars decreases. what would we expect would happen in the market for american-made cars? the equilibrium price and quantity fall. the equilibrium price rises, but the effect on quantity is uncertain. the equilibrium quantity falls, but the effect on price is uncertain. the equilibrium price falls, but the effect on quantity is uncertain. the equilibrium quantity rises, but the effect on price is uncertain. question at position 20 20

Answer 1

In the market for American-made cars, a decrease in the U.S. selling price of Japanese-made cars and a decrease in the price of steel used to make American-made cars would result in a fall in the equilibrium price and quantity of American-made cars.

Step-by-step explanation:

In the market for American-made cars, if there is a decrease in the U.S. selling price of Japanese-made cars (a substitute for American-made cars) and at the same time, the price of steel in the U.S., used to make American-made cars, decreases, the equilibrium price and quantity would be expected to fall.

This is because the decrease in the price of Japanese-made cars makes them more attractive to consumers, leading to a decrease in demand for American-made cars. Furthermore, the decrease in the price of steel lowers the production cost for American-made cars, allowing car manufacturers to reduce their selling price without sacrificing their profit margin.

As a result, both the equilibrium price and quantity of American-made cars would likely decrease, leading to a shift in the market for American-made cars.