Which of the Following Increases the Equilibrium Price of a Used

question 409

Multiple Choice

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

• A) 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
• B) new federal legislation that raises the legal driving age to twenty-four in all states
• C) a new fee that used car dealers must pay to the government on all sales of used cars
• D) All of the above because each is consistent with the "law of demand."

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Definitions:

Economic Profits

Profits exceeding the opportunity costs of all resources employed, used as a measure of efficiency and competitiveness in economic theory.

Limited Resources

Refers to the finite amount of resources available for production of goods and services, including labor, capital, and natural resources.

Market Supply Curve

A graphical representation showing the relationship between the price of a good and the total output of that good supplied by all producers in the market.

Identical Firms

Refers to companies within the same industry that have similar methods of production, costs, and characteristics, making their products essentially indistinguishable.