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 manufactures must pay their employees. Initially, the graph shows the supply curve when robots can fasten 2,500 bolts per hour and auto workers earn $25 per hour. Use the calculator to help you answer the following question. 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.

Explanation / Answer

Correct Answer:

This will cause supply of sedan to decrease, which is reflected in the graph by downward movement of horizontal line on supply curve.

Explanation:

Supply of sedan will decrease with decrease in prices. It will be along the supply curve. Downward movement of horizontal line at price level of $17000 will make an intersection point that will give the quantity supplied in the market.

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