Question

Suppose that US consumers started to buy more German cars explain and show graphically what would happen to the demand and supply curves as well as to the equilibrium point E.

Answer 1

When the US consumers start to buy more German cars there will be different results depending on whether US or Germany Car market is taken into consideration.

In the Germany market for car,

Demand curve will shift rightwards and supply curve will remain same, which will shift equilibrium E and price and quantity both will rise.

In the US market for Car,

Demand curve will shift leftward and supply curve will remain same , due to less demand of US cars, demand will fall. And equilibrium E will fall with less price and Less quantity at new equilibrium.