Buyers of electric cars are suddenly offered a subsidy from the government. As a result we expect the equilibrium price:

Question

Quizplus · Accepted Answer

When the government offers a subsidy for electric cars, it effectively lowers the cost for consumers or increases the incentive for producers to manufacture more cars. This increases demand or supply, leading to a higher equilibrium quantity. The increased demand or supported supply also tends to push the equilibrium price up, as consumers are willing to pay more due to the subsidy, or producers can sell the car for more due to increased demand.

Buyers of Electric Cars Are Suddenly Offered a Subsidy from the Government