Imagine that gas prices have increased to $5.00 per gallon. What will happen to the supply of fuel- efficient cars in the short run and in the long run? Explain.
Well, when the gas price is increased, people want to use the car that has low usage in gas.
So the demand and supply of fuel-efficient cars in the short run will be increased.
But as the year passes, supply will started to slowly dropping
hope this helps
The effect of price increase on fuel-efficient cars would be as follows:
- Increase in demand for fuel-efficient cars in the short run and supply will increase.
- In the long run, the supply will fall.
The price of a specific product, while the other factors stay constant, carries a direct impact on the supply of that product.
As per the question, the rise in prices of gas would result in increased demand for fuel-efficient cars in the short run.
While in the long-term, the peak will be attained and then, the demand will fall eventually.
Learn more about "Demand" here:
brainly.com/question/13320101