If the price of cars falls, are carmakers likely to make ___________.more carsfewer cars
Question
If the price of cars falls, are carmakers likely to make ___________.more carsfewer cars
Solution
If the price of cars falls, carmakers are likely to make fewer cars. This is because the lower price could mean a decrease in revenue for the carmakers. To maintain their profit margins, they might reduce the production of cars. However, this can also depend on the elasticity of demand for cars. If the demand is elastic, a decrease in price could lead to an increase in demand, which might prompt carmakers to produce more cars. But generally, a fall in price is likely to lead to a decrease in production.
Similar Questions
Which of the following scenarios would likely shift the supply of cars to the left (decrease in supply)?multiple choiceAutomobile workers become more productive.The price of automotive paint decreases.The price of steel and aluminum increase.The price of cars decreases.
The price of large automobiles rises (with the price of small autos remaining the same):
10. A government taxes the production of cars. What is likely to decrease?A) The cost of supplying carsB) The price of carsC) The revenue for the governmentD) The supply of cars at every price
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