The Motor Vehicle Builders' Union bargained for higher wages and more benefits for its members. As a result of the higher wages and increased benefits, i. the quantity of new cars supplied decreases.
Ii) the supply of new cars decreases.
Iii) the supply of new cars increases.

Question

Quizplus · Accepted Answer

According to the law of supply, as the cost of production increases (due to higher wages and benefits), the supply curve shifts inward or to the left. This means that the quantity of new cars supplied at every price level will decrease, resulting in a decrease in the overall supply of new cars. Therefore, only statement ii is correct, and the answer is B.

The Motor Vehicle Builders' Union Bargained for Higher Wages and More