Use the following to answer questions :
Figure 3-3
-Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?
A)Prices fall, Quantity falls
B)Prices rise, Quantity falls
C)Prices rise, Quantity rises
D)Prices and Quantity do not change.
E)None of the above.

Question

Use the following to answer questions :
Figure 3-3 
-Assume that automotive workers go on strike, so that the production of cars falls.Given the supply and demand curves in Figure 3-3, which of the following would result in comparison to the initial equilibrium position?
A)Prices fall, Quantity falls 
B)Prices rise, Quantity falls 
C)Prices rise, Quantity rises 
D)Prices and Quantity do not change. 
E)None of the above.

Quizplus · Accepted Answer

When the production falls due to the strike, the supply curve shifts to the left, leading to a higher equilibrium price and lower quantity demanded. Therefore, prices rise, and quantity falls, as shown by the new equilibrium point on the graph.

Use the Following to Answer Questions