If car makers are required to install gadgets to improve the cleanliness of car-exhaust, we would
expect the equilibrium quantity in the car market to decrease.

Question

Quizplus · Accepted Answer

If car makers are required to install gadgets to improve the cleanliness of car-exhaust, the cost of producing cars would increase. As a result, car makers would have to increase the price of cars to maintain their profit margin. This increase in price would decrease the quantity of cars demanded by consumers, leading to a decrease in the equilibrium quantity.

If Car Makers Are Required to Install Gadgets to Improve