ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The following graph shows the supply curve for sedans in an imaginary market. For simplicity, assume that all sedans are identical and sell for the same price. Two factors that affect the supply of sedans are the level of technical knowledge—in this case, the speed with which manufacturing robots can fasten bolts, or robot speed—and the wage rate that auto manufacturers must pay their employees. Initially, the graph shows the supply curve when robots can fasten 2,500 bolts per hour and autoworkers earn $25 per hour.

Suppose that the price of a sedan increases from $21,000 to $26,000. This would cause the quantity supplied of sedans to ________ (options: increase, decrease) , which is reflected on the graph by a ________ (options: shift of, movement along) the supply curve. 

Suppose the workers' union negotiates a pay raise. This causes a _________ (options: leftward movement along, rightward movement along, leftward shift of, rightward shift of) the supply curve because the pay raise makes cars _________ (options: more fashionable, more expensive to build, less expensive to build, safer). 

Graph Input Tool
Supply for Sedans
50
I Price of a Sedan
(Thousands of
dollars)
21
40
Supply
Quantity Supplied
(Šedans per month)
270
30
SUPPLY SHIFTERS
20
Robot Speed
(Bolts per hour)
2500
10
Autoworker Wage
(Dollars per hour)
25
100 200 300 400 500 600 700 800 900
QUANTITY (Sedans per month)
PRICE (Thousands of dollars)
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Transcribed Image Text:Graph Input Tool Supply for Sedans 50 I Price of a Sedan (Thousands of dollars) 21 40 Supply Quantity Supplied (Šedans per month) 270 30 SUPPLY SHIFTERS 20 Robot Speed (Bolts per hour) 2500 10 Autoworker Wage (Dollars per hour) 25 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) PRICE (Thousands of dollars)
Expert Solution
Check Mark
Step 1

Here in the graph price of the sedan is on y-axis and quantity of sedan on x-axis. 

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