Reflects the subsequent developments in the domestic

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Suppose that currently 4 million automobiles are imported into the U.S. and the average price of those automobiles is $25,000. Further suppose that Congress passes legislation approving a 3 million annual quota on imports that is signed into law by the President. Which of the following statements correctly reflects the subsequent developments in the domestic U.S. automobile industry?

a. Equilibrium price & quantity will decrease.

b. Equilibrium price will increase and the quantity will not change.

c. Equilibrium price will decrease and the quantity may not change.

d. Equilibrium price will increase and quantity will decrease.

e. none of the above statements is correct.

Reference no: EM131193874

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