What Will Happen to the Equilibrium Price and Quantity of New

question 249

Multiple Choice

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?

• A)Price will fall, and the effect on quantity is ambiguous.
• B)Price will rise, and the effect on quantity is ambiguous.
• C)Quantity will fall, and the effect on price is ambiguous.
• D)Quantity will rise, and the effect on price is ambiguous.

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Definitions:

Monopsony Power

A situation in the marketplace where a single buyer confronts numerous sellers, granting this buyer a substantial influence over pricing.

Buyer Interaction

The dynamics and exchanges between buyers in a market, which can influence price, demand, and supply conditions.

Monopsony Power

Refers to a market situation where there is only one buyer for a particular product or service, giving that buyer significant control over prices and terms.

Outside Suppliers

External entities or companies that provide goods or services to another company, often playing a critical role in supply chains.