Example 2 a change in supply event new technology

This preview shows page 50 - 66 out of 70 pages.

EXAMPLE 2: A Change in Supply EVENT: New technology reduces cost of producing hybrid cars. STEP 1: S curve shifts because event affects STEP 2: S shifts right because event P Q D 1 S 1 P 1 Q 1 S 2 P 2 Q 2 STEP 3: The shift causes price to fall and quantity to rise.
Image of page 50

Subscribe to view the full document.