Question

name: carmen date: reasons for changes in supply part i: read the following seven newspaper headings. in each case, decide if the event will cause any change in the current market supply of new cars sold in the united states. if so, decide if it is an increase or decrease, and write the correct answer. for example, if you think headline a means there will be a decrease in supply, write “decrease” in the first blank. for headline b, if you think supply will increase, write “increase”. if the event causes no change in supply, write “no change”. part ii: for each headline, list the reason (determinant of demand) for the change. your options for reasons are the determinants of demand as below: a change in the cost of factors of production a change in technology a change in producers’ price expectations. a change in the number of sellers in the market a change in profit opportunities from producing other products a. large auto producer goes bankrupt, closes factories a. supply decrease reason a change in the number of sellers b. shortages abound in consumer electronics - consumers can’t buy enough new gadgets a. supply no change reason none of given determinants c. steel prices rise 10% a. supply decrease reason a change in the cost of factors of production d. buyers reject new car models: sellers lower prices a. supply no change reason none of the given determinants

Explanation:

Step1: Analyze Option A

A large auto - producer going bankrupt and closing factories reduces the number of sellers in the market. Fewer sellers mean less production capacity, so the supply of new cars decreases.

Step2: Analyze Option B

Shortages in consumer electronics are about a different product category. It has no direct impact on the supply determinants of new cars in the given list, so there is no change in the supply of new cars.

Step3: Analyze Option C

Steel is a factor of production for cars. When steel prices rise, the cost of production for cars increases. Producers are less willing or able to supply the same quantity at the previous prices, so the supply of new cars decreases.

Step4: Analyze Option D

Buyers rejecting new car models and sellers lowering prices is a demand - side and price - adjustment situation. It does not directly affect the supply determinants listed, so there is no change in the supply of new cars.

Answer:

A. Supply: Decrease, Reason: A change in the number of sellers in the market
B. Supply: No change, Reason: None of the given determinants
C. Supply: Decrease, Reason: A change in the cost of factors of production
D. Supply: No change, Reason: None of the given determinants