Question

Draw a supply and demand grag and for the below event and write what economists would...

Draw a supply and demand grag and for the below event and write what economists would predict for price and quantity.

Market for BMWs in the US: there is a new rebate for all domestically produced cars, BMW has increased the amount of their cars that they are willing and able to sell in the us.

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Answer #1

Here, as rebate is give it will increase the demand and shift the demand curve to D1, and an increase in the supply will shift the supply curve to S1. The quantity in the market will increase to Q1 form Q but the price in the market will be the net affect between the supply and demand which will be indeterminate.

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