The Effect on the New Car Market of a Lower

question 52

Multiple Choice

The effect on the new car market of a lower price for used cars can best be described by:

• A)a shift in the supply curve to the right, decreasing the equilibrium price
• B)a shift in the supply curve to the left, increasing the equilibrium price
• C)a shift in the demand curve to the left, decreasing the equilibrium price
• D)a shift in both the supply and demand curves to the right, leaving the equilibrium price the same
• E)a shift in the demand curve to the right and a shift in the supply curve to the left, increasing the equilibrium price

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Definitions:

Government-operated Firm

is a business entity controlled or owned by the government to provide goods or services to the public.

Residual Claimants

Individuals or entities that have a claim on the remaining assets of a company after all liabilities have been satisfied, typically the shareholders.

State University

A publicly funded university that is primarily supported by a state government.

Barrier to Entry

Factors that prevent or hinder companies from entering into a specific market or industry.