Suppose a new legislation is introduced and car producers have to pay higher wages to their workers. What will be the effect on the car market?

Question

Quizplus · Accepted Answer

When car producers have to pay higher wages to their workers, it increases their cost of production. As a result, they will increase the price of cars to maintain their profit margins, leading to a decrease in the quantity of cars demanded by consumers. Therefore, the price will increase, and quantity will decrease.

Suppose a New Legislation Is Introduced and Car Producers Have