Supply chain shortages have limited the number of microchips available to car manufacturers in the US. Since every new car needs microchips to control it, we can think of a limit on the number of microchips as a quota on the production of new cars. If this quota is binding, which of the following may be a market consequence of a production quota on new cars in the US market? Do not worry about the underlying facts; only whether the explanations make economic sense given our model. (Select one or more) (a) The quantity supplied of new cars will rise to meet the quota. (b) The quantity supplied of new cars will fall to meet the quota. (c) The quantity supplied is unaffected by a binding quota. (d) The price of new cars will rise until there is no excess demand. (e) The price of new cars will fall until there is no excess demand.

Supply chain shortages have limited the number of microchips available to car manufacturers in the US. Since every new car needs microchips to control it, we can think of a limit on the number of microchips as a quota on the production of new cars. If this quota is binding, which of the following may be a market consequence of a production quota on new cars in the US market? Do not worry about the underlying facts; only whether the explanations make economic sense given our model. (Select one or more) (a) The quantity supplied of new cars will rise to meet the quota. (b) The quantity supplied of new cars will fall to meet the quota. (c) The quantity supplied is unaffected by a binding quota. (d) The price of new cars will rise until there is no excess demand. (e) The price of new cars will fall until there is no excess demand.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 10PA: A friend of yours is considering two cell phone service providers. Provider A charges 120 per month...

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Supply chain shortages have limited the number of microchips available to car manufacturersin the US. Since every new car needs microchips to control it, we can think of a limit on thenumber of microchips as a quota on the production of new cars. If this quota is binding,which of the following may be a market consequence of a production quota on new cars in theUS market? Do not worry about the underlying facts; only whether the explanations makeeconomic sense given our model. (Select one or more) (a) The quantity supplied of new cars will rise to meet the quota.(b) The quantity supplied of new cars will fall to meet the quota.(c) The quantity supplied is unaffected by a binding quota.(d) The price of new cars will rise until there is no excess demand.(e) The price of new cars will fall until there is no excess demand.(f) Consumer surplus will increase as a result of the quota.(g) Consumer surplus will decrease as a result of the quota.(h) Consumer surplus will be unaffected by the…
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