If the price of used plug-in electric cars is expected to rise in six months, the reaction in the supply of those cars in the market today would likely be a(n): a

Economics Dec 08, 2020

If the price of used plug-in electric cars is expected to rise in six months, the reaction in the supply of those cars in the market today would likely be a(n):

a. upward movement along the supply curve.

b. shift of the supply curve to the right.

c. downward movement along the supply curve.

d. shift of the supply curve to the left.

Expert Solution

The correct option is (d). A shift of the supply curve to the left.

Here, it is given that the cost of an important raw material (plug-in) in electric cars is expected to rise in the coming six-months; therefore, in this case, the supply curve will tend to shift leftward as the cost of producing electric cars tends to rise.

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