In order to grow manufacturing jobs

Assignment Help Business Economics

Reference no: EM131424683

Demand for cars is P = 100−8Q and supply is P = 10 +Q. Q represents number of cars in thousands; and P is the price per car in thousands of dollars.

(Equilibrium price P1*=20 & Q1*=10)

Question:

In order to grow manufacturing jobs, suppose the federal government decides to give drivers refund $5,000 when they file their income taxes if they purchase a new car that was made in US. Will this policy affect the demand or supply curve and which way will your choice shift? Explain.

Hint: Think about how government wants to affect P* and Q*

Reference no: EM131424683

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