123>Assignments >Quiz: Supply and Quiz: Supply and Demand Choose the BEST answer

Question

123>Assignments >Quiz: Supply and Quiz: Supply and Demand Choose the BEST answer Soon after America's declaration of war on Japan the British colony of Malaya was overrun by advancing Japanese military forces Malaya was the primary source of natural rubber to the US automobile industry vehicles has surged in response to massive govemment orders. Based on these facts, how would you predict the equibrium price and quantity of vehicles to change after the fall of Malaya? before the war. At the same time demand for military 0 the equibriumpce all noease but tsimpossible to determen te equilbrian quanty change without additional rhrmation. and price wil increase Next >

Explanation / Answer

Solution: The equilibrium price will increase but it is impossible to determine the equilibrium quantity change without additional information.

The price will increase because demand has increased on the part of USA however supply is uncertain i.e. it is not sure whether Japan restricted the supply or there was no effect on business. Hence equilibrium quantity can not be determined.

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