The following calculator shows the supply curve for sedans in an imaginary marke

Question

The following calculator 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 auto-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 Use the calculator to help you answer the following questions. You will not be graded on any changes to the calculator; it's just here to help you answer the questions that follow Tool tip: Use your mouse to drag the green line on the graph. The values in the boxes on the right side of the calculator will change accordingly. You can also directly change the values in the boxes with the white background by clicking in the box and typing. When you click the Calculate button, the graph and any related values will change accordingly. PRICE IThousands of dollars) 50 + CALCULATOR Price of a Sedan Thousands of dollars 20 40 Quantity Supplied [Sedans per month 200 30 SUPPLY SHIFTERS Current Values Initial Values 20 Robot Speed Bolts per hourl 2500. 2500 Autoworker Wage Dollars per hour] 10 25 25 0 100 200 300 400 500 600 700 800 900 QUANTITY ISedans per monthl Consider the previous graph. Suppose that the price of a sedan decreases from $22,000 to $17,000. This would cause the sedans to decrease, which is reflected on the graph by a of the supply curve. Following a technological improvement-for example, an increase in the speed with which robots can attach bolts to cars-there is a the supply curve, because the technological improvement makes cars

Explanation / Answer

Quantity Supplied of sedans decrease, profitability falls Movement along the sapply curve Shift to right, due to increased output Cheap as the price reduces

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