2. Market: cars (q is "cars" and p is "prices of cars")

Event: Suppose that the increase in steel tariffs makes the price of steel used to make cars increase.

For questions #1 and #2, draw one graph of the market indicated wol na for each question and explain and illustrate the effect on the bloe gmod al market of the event described, by completing parts *a' through 'd' below for each question. strol mengsib basmob bos loque s will bits song mundiliupo litini or gniwon a) Draw a supply-demand diagram for the market, showing monaup the initial equilibrium price and quantity (indicated with (dovrouge P.*, Q.* on the P and Q axes respectively). bunting avail baum (bramab no vigque) avaro sno leifW ( b) Does the event described shift the supply curve or the blew ai bru demand curve (it will only shift one of the curves)? In what Doob direction? Briefly explain. c) On the same graph as in part (a) show the shift in the curve that you described in part (b) above. Show the new equilibrium price and quantity resulting from this shift (indicated with P *, Q,* on the P and Q axes respectively.) d) Explain what the supply and demand model indicates will happen to equilibrium price and quantity in this market due to the event you described. Does this make sense based on what you know from living in markets your whole life