Assume the costs of production in the U.S.auto industry are rising and,at the same time,the prices of Japanese-made autos are decreasing.What would reasonably be expected to happen to the equilibrium price and quantity of U.S.-made autos?

Question

Quizplus · Accepted Answer

As the costs of production in the U.S. auto industry rise, the supply of U.S.-made autos would decrease, leading to a higher price. However, the decrease in prices of Japanese-made autos would increase their demand, reducing the demand for U.S.-made autos. This would lead to a decrease in the equilibrium quantity of U.S.-made autos, but the effect on price is indeterminate due to opposing forces.

Assume the Costs of Production in the U