Question

After reading Miller chapters 3 and 4 answer the following two supply and demand questions, using the terms and explanation from the chapter.

1. Assume an initial equilibrium in the domestic automobile market. Using supply and demand analysis explain what will happen to both the equilibrium price and equilibrium quantity if the following happens:
   
   You hear on the news that the Japanese have increased the price of their cars (price of a substitute).
   
   
2. Assume an initial equilibrium in the domestic automobile market. Using supply and demand analysis explain what will happen to both the equilibrium price and equilibrium quantity if the following happens:
   
   You hear on the news that a major technology breakthrough for producing automobiles has happened

Answer 1