Suppose the government required car makers to install costly but effective emission control devices on cars. This will:

Question

Quizplus · Accepted Answer

By requiring car makers to install costly emission control devices, the cost of producing cars increases. As a result, car makers will be forced to charge higher prices for their cars in order to cover the increased costs. With higher prices, the quantity of cars sold will likely decrease since consumers will be less willing to purchase cars at the higher prices. Thus, the correct answer is B.

Suppose the Government Required Car Makers to Install Costly but Effective