The pandemic caused the supply of automobiles to decrease, which increased automobile pric-es. The increase in revenue from automobile sales exceeded the increase in dealerships' costs of production
The pandemic caused the supply of automobiles to decrease, which increased automobile pric-es. The increase in revenue from automobile sales exceeded the increase in dealerships' costs of production
Chapter4: Supply And Demand: An Initial Look
Section: Chapter Questions
Problem 3TY
Related questions
Question
![The pandemic offered automobile dealerships an unexpected boost.
Factory shutdowns tightened inventory, causing prices to rise and
profitability to surge. Which of the following explains what happened
when the pandemic decreased dealerships' inventory and increased
automobile prices?
O The pandemic decreased the supply of automobiles, which made the demand
for automobiles more price elastic. This meant that when prices increased, the
revenue from sales of automo-biles increased
O Factory shutdowns eliminated dealerships' total short-run costs. Therefore,
each dollar of reve-nue from automobile sales added a dollar to the
dealerships' profits.
O Production shutdowns caused the demand curve for automobiles to shift to
the left. As a result, automobile prices and revenue both increased.
O The pandemic caused the supply of automobiles to decrease, which increased
automobile pric-es. The increase in revenue from automobile sales exceeded
the increase in dealerships' costs of production](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa750a5ad-eee7-4d1d-826f-de645065a398%2F6ebeab12-1a07-440f-9223-bf6987526af5%2Fj0wix1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The pandemic offered automobile dealerships an unexpected boost.
Factory shutdowns tightened inventory, causing prices to rise and
profitability to surge. Which of the following explains what happened
when the pandemic decreased dealerships' inventory and increased
automobile prices?
O The pandemic decreased the supply of automobiles, which made the demand
for automobiles more price elastic. This meant that when prices increased, the
revenue from sales of automo-biles increased
O Factory shutdowns eliminated dealerships' total short-run costs. Therefore,
each dollar of reve-nue from automobile sales added a dollar to the
dealerships' profits.
O Production shutdowns caused the demand curve for automobiles to shift to
the left. As a result, automobile prices and revenue both increased.
O The pandemic caused the supply of automobiles to decrease, which increased
automobile pric-es. The increase in revenue from automobile sales exceeded
the increase in dealerships' costs of production
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)
![EBK HEALTH ECONOMICS AND POLICY](https://www.bartleby.com/isbn_cover_images/9781337668279/9781337668279_smallCoverImage.jpg)
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)
![EBK HEALTH ECONOMICS AND POLICY](https://www.bartleby.com/isbn_cover_images/9781337668279/9781337668279_smallCoverImage.jpg)