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In the automobile industry, workers have just negotiated a new contract giving workers a large raise. There has also been an increase in the number of licensed drivers who are in the market for a new car. In the market for new automobiles, the effects that these changes will have on the equilibrium price and quantity include:

1. price will decrease, and the effect on quantity is indeterminate.
2. price will decrease, and quantity will increase.
3. price will increase, and quantity will decrease.
4. price will increase, and the effect on quantity is indeterminate.

Respuesta :

Answer:

Indeterminate change in equilibrium price, equilibrium quantity would increase

Explanation:

The large raise would increase productivity of workers therefore supply of automobiles would increase. This would shift the supply curve for automobiles to the right. As a result, price would fall and quantity would rise.

The number of licensed drivers who are in the market for a new car would increase the demand for cars. This would shift the demand curve to the right. Price would rise and quantity would rise.

The combined effect of this would be an indeterminate change in equilibrium price and an increase in equilibrium quantity

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