Question

Both friends agree that the demand and supply for hybrid cars will increase. For each of the following situations, determine whether the demand curve or the supply curve increases by dragging the item to the appropriate category.
a. The government gives consumers a subsidy to buy hybrid cars.
b. More automobile producers start producing hybrids.
c. The price of non-hybrid cars falls.
d. The price of batteries for hybrid cars rises.
e. Gasoline prices rise.

Answer 1

Answer:

1. The subsidy will work as a motivating factor for the consumers as the product will be purchased at a lower cost. Thus. it will increase the demand curve.

2. This will increase the supply curve due to increase in the suppliers throughout the market.

3. It will increase the demand curve as the consumers will face lower pressure on their pocket while purchasing cars.

4. This will decrease demand as the price of cars rises due to increase in the cost of production.

5. Increase in price of gasoline will decrease demand for cars as the consumers have to face high pressure on their pockets for using he cars.