If Car Makers Are Required to Install Gadgets to Improve

question 153

True/False

If car makers are required to install gadgets to improve the cleanliness of car-exhaust, we would
expect the equilibrium quantity in the car market to decrease.

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Definitions:

Zero-coupon Bond

A type of bond that does not pay interest during its life but is sold at a discount and matures at its face value.

Maturity

The date on which the principal amount of a loan, bond, or other financial instrument becomes due and payable.

Arbitrage

The practice of buying and selling equivalent assets in different markets to take advantage of a price difference.

Law of One Price

An economic theory that states that in efficient markets, identical goods must have only one price when prices are expressed in a common currency, absent any transaction costs and tariffs.