Which of the Following Increases the Equilibrium Price of a Used

question 458

Multiple Choice

Which of the following increases the equilibrium price of a used car and decreases the equilibrium quantity?

• A) new federal legislation that raises the legal driving age to twenty-four in all states
• B) a new fee that used car dealers must pay to the government on all sales of used cars
• C) an announcement by the U.S. Attorney General that the windows on older cars were made with cheaper glass that can explode at high speeds
• D) All of the above because each is consistent with the ʺlaw of demand.ʺ

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Definitions:

Income

Money that an individual or business receives, typically in exchange for providing a good or service, or through investing.

Slope

In mathematics, the rate at which a line inclines or declines, indicating the steepness of the line.

Regression Line

A straight line that describes how a response variable Y changes as an explanatory variable X changes, used in linear regression.

Least Squares Regression Line

A straight line that minimizes the sum of the squared differences between the observed values and the values predicted by the line.