Which of the following raises the equilibrium price and increases the equilibrium quantity of used cars?

Question

Quizplus · Accepted Answer

When used cars are an inferior good, a fall in income will increase the demand for them. This will shift the demand curve to the right, raising the equilibrium price and increasing the equilibrium quantity of used cars. A increase in the wage rate paid to used car salespeople would increase the cost of selling used cars, which could shift the supply curve to the left or have no effect on the equilibrium price and quantity, depending on the elasticity of supply.

Which of the Following Raises the Equilibrium Price and Increases