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How does an increase in an excise tax on cars affect the supply of cars?

A. More cars will be made.

B. Fewer cars will be made.

C. Supply will stay the same.

D. Supply will increase.

Ā 

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Sonal Bahl
Sonal BahlLv10
5 Oct 2020

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Related questions

1.) Christian has an income of $60,000 and plans on purchasing a BMW M3. He found out that he will be promoted to manager at his firm increasing his salary to $80,000. BMW M3 announced that it will increase the price of its M3 from $70,000 to $72,000 due to an increase in demand. BMW is forecasting a decrease of quantity demanded from 15,000 cars to 12,000 cars. Meanwhile, Mercedes Benz finds out about BMWs decision to increase its price, so it decreases its price of the C43 from $72,000 to $70,000 thereby increasing its quantity supplied from 28,000 to 30,000 cars. Mercedes Benz hopes to increase the quantity demanded from 17,000 cars to 20,000. What is the price elasticity of demand for BMW M3s?

A) 5.33 B) 6.33

C) 7.33 D) 8.33

2.) Christian has an income of $60,000 and plans on purchasing a BMW M3. He found out that he will be promoted to manager at his firm increasing his salary to $80,000. BMW M3 announced that it will increase the price of its M3 from $70,000 to $72,000 due to an increase in demand. BMW is forecasting a decrease of quantity demanded from 15,000 cars to 12,000 cars. Meanwhile, Mercedes Benz finds out about BMWs decision to increase its price, so it decreases its price of the C43 from $72,000 to $70,000 thereby increasing its quantity supplied from 28,000 to 30,000 cars. Mercedes Benz hopes to increase the quantity demanded from 17,000 cars to 20,000. What is the price elasticity of demand for Mercedes Benz C43s?

A) 5.33 B) 6.33

C) 7.33 D) 8.33

3.) Christian has an income of $60,000 and plans on purchasing a BMW M3. He found out that he will be promoted to manager at his firm increasing his salary to $80,000. BMW M3 announced that it will increase the price of its M3 from $70,000 to $72,000 due to an increase in demand. BMW is forecasting a decrease of quantity demanded from 15,000 cars to 12,000 cars. Meanwhile, Mercedes Benz finds out about BMWs decision to increase its price, so it decreases its price of the C43 from $72,000 to $70,000 thereby increasing its quantity supplied from 28,000 to 30,000 cars. Mercedes Benz hopes to increase the quantity demanded from 17,000 cars to 20,000. What is the price elasticity of supply for Mercedes Benz C43s?

A) 1.33 B) 2.33

C) 3.33 D) 4.33

Discuss the immediate effects of the following events on demand or supply in each respective market. Assume each market is perfectly competitive. Indicate if you think demand or supply will shift right or left. Discuss how any shift in demand or supply will affect the market price.
If you believe the events will cause a shift in either the demand or supply schedule, indicate which variable caused the shift in demand or supply.

Market Event
a. Airline Security guards Terrorist attack on the U.S.

b. Wal -Mart stock The company expects profits to decrease in the future.

c. Yen Japanese products become more attractive.

d. Used Cars Major manufacturers introduce zero per cent financing on new cars

2) "As domestic car prices have increased, consumers have found foreign cars to be a better bargain. Consequently, domestic car sales have fallen and foreign car sales have risen." Based on this information alone, there has been a A) shift in the demand curves for both domestic and foreign cars. B) shift in the supply curves for both domestic and foreign cars. C) movement along the demand curves for both domestic and foreign cars. D) movement along the demand curve for domestic cars and a shift of the demand curve for foreign cars. E) shift of the demand curve for domestic cars and a movement along the demand curve for foreign cars.

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