Final answer:
When an automobile manufacturer produces more cars without increasing production costs, it has increased its efficiency. Efficiency is improved by producing more using the same level of resources, and can be influenced by factors such as input costs, technology, and government policies, including subsidies for fuel-efficient vehicles.
Step-by-step explanation:
When an automobile manufacturer increases the total number of cars produced while keeping the production costs the same, the manufacturer has increased its efficiency. Efficiency is a measure of how well resources are used to achieve a goal; producing more with the same or fewer resources means a higher efficiency. In this case, the manufacturer is able to produce more cars without an increase in production costs, indicating a more efficient use of resources and likely benefiting from economies of scale.
Considering factors that affect supply in the automobile industry, changes in the cost of inputs, such as a decrease in the price of steel, can significantly impact a firm's cost of production and supply. If the cost of inputs falls, this can lead to an increase in profits and supply, contributing to the manufacturer's efficiency. Other factors influencing supply include technology advancements, natural conditions, and government policies; these factors can affect the cost and efficiency of production as well.
Government intervention can also be a means to align private costs with social costs, thereby achieving socially desirable outcomes. For instance, if a government wants to encourage the production and sales of fuel-efficient cars, it could subsidize the production to reduce the marginal private costs, making them closer to the marginal social costs, thus incentivizing increased production.