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Suppose we are analyzing the market for new cars. The supply of new cars is perfectly inelastic and demand is perfectly elastic. Use demand and
Suppose we are analyzing the market for new cars. The supply of new cars is perfectly inelastic and demand is perfectly elastic. Use demand and supply graph to illustrate the impact of an increase in input prices (for car manufacturers) on demand or supply. On the same graph, show how equilibrium price and equilibrium quantity would change
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