Both friends agree that the demand and supply for hybrid cars will increase. For each of the following situations, determine whether the demand curve or the supply curve increases by dragging the item to the appropriate category.

a. The government gives consumers a subsidy to buy hybrid cars.
b. More automobile producers start producing hybrids.
c. The price of non-hybrid cars falls.
d. The price of batteries for hybrid cars rises.
e. Gasoline prices rise.

Respuesta :

Answer:

1. The subsidy will work as a motivating factor for the consumers as the product will be purchased at a lower cost. Thus. it will increase the demand curve.

2. This will increase the supply curve due to increase in the suppliers throughout the market.

3. It will increase the demand curve as the consumers will face lower pressure on their pocket while purchasing cars.

4. This will decrease demand as the price of cars rises due to increase in the cost of production.

5. Increase in price of gasoline will decrease demand for cars as the consumers have to face high pressure on their pockets for using he cars.

The explanation to each part should be explained below:

The following information should be considered:

A)  A government subsidy is equal to a reduction in price for consumers. A decline in prices increases demand. The demand curve increase.

b)More producers result in more output, which is an increase in supply. The supply curve increases.

c). Non-hybrid cars should be the substitutes goods for hybrid vehicles. In the case the price of non-hybrid cars falls, their demand will increases. Consequently, the demand for hybrid cars reduces. Both The demand curve and supply curve will not increase.

d).  An increase in production cost results in a price rise. Consequently, it reduces the demand for hybrid cars. Both the demand and curve curves will not increase.

e). An increase in gasoline price will make non-hybrid cars less desirable however will increase the demand for hybrid cars. The demand curve for hybrid cars increases.

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