An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise. Holding everything else constant, how would this affect the market for gasoline-powered automobiles (a substitute for electric automobiles)?
1. The demand for gasoline-powered automobiles would decrease because consumers could afford to buy fewer gasoline-powered automobiles.
2. The supply of gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would decrease.
3. The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would decrease.
4. The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would increase.
Answers: 2
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