New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline falls, the price of steel increases, public transportation becomes more expensive and less comfortable, auto workers receive higher wages, and automobile insurance becomes less expensive?

Question

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The price of new cars will rise because the price of gasoline falls, the price of steel increases, public transportation becomes more expensive and less comfortable, auto workers receive higher wages, and automobile insurance becomes less expensive. These factors will all increase the cost of producing new cars, which will lead to a higher equilibrium price.

New Cars Are Normal Goods