Assume an Auto Firm's Factories Are Capable of Producing Both

question 45

Multiple Choice

Assume an auto firm's factories are capable of producing both large and small cars and are operating at full capacity.Assume the price of large cars increases due to a shift in consumers' preferences toward large cars and away from smaller cars.What would reasonably be expected to happen to the equilibrium price and quantity of the firm's small cars?

• A)Equilibrium price would increase and equilibrium quantity would decrease.
• B)Equilibrium price and quantity would both decrease.
• C)Equilibrium price would decrease and equilibrium quantity would increase.
• D)Equilibrium price and quantity would both increase.

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Definitions:

Breach Of Contract

Occurs when one party to a contract fails to fulfill their part of the agreement, allowing the other party to seek legal remedies.

Bush Pilot

A pilot who flies aircraft into and out of remote or undeveloped areas, often requiring specialized skills for takeoff and landing.

Helicopter

A type of aircraft that can take off and land vertically, as well as hover and move in all directions.

Substantial Performance

Refers to the completion of nearly all the requirements of a contract or agreement, leaving only minor details uncompleted, which do not significantly alter the outcome or utility received by the other party.