Consumers who traded in a used car for a new vehicle under the Cash-for-Clunkers program received a voucher worth up to $4,500 to offset the price of the consumer's new vehicle. What effect did that program's requirement to destroy all trade-in cars have on the market for used cars?
A) The supply of used cars increased, decreasing the price of used cars.
B) The supply of used cards decreased, increasing the price of used cars.
C) The demand for used cars increased, increasing the price of used cars.
D) The demand for used cars decreased, decreasing the price of used cars.

Question

Quizplus · Accepted Answer

The requirement to destroy all trade-in cars under the Cash-for-Clunkers program reduced the supply of used cars in the market, leading to an increase in the price of used cars. This is because fewer used cars were available for sale, and buyers had to compete to purchase the available ones, leading to bidding wars that drove up the prices.

Consumers Who Traded in a Used Car for a New