Let D = demand,S = supply,P = equilibrium price,Q = equilibrium quantity.What happens in the market for solar panels if the government offers tax breaks to encourage manufacturers to produce more solar panels?
A)D increases,S no change,P and Q increase.
B)S increases,D no change,P decreases,Q increases.
C)D and S increase,P and Q decrease.
D)D no change,S increases,P decreases,Q decreases.

Question

Quizplus · Accepted Answer

Tax breaks for manufacturers lower the cost of production, leading to an increase in supply (S increases) without directly affecting consumer demand (D no change). With more supply and the same demand, the equilibrium price (P) decreases to entice more consumers to buy, while the equilibrium quantity (Q) increases because more products are available at a lower price.

Let D = Demand,S = Supply,P = Equilibrium Price,Q =