ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If the price of steel increases, the supply of cars will decrease. This will cause the equilibrium price to increase and the equilibrium quantity to decrease.

Detailed explanation-2: -Answer and Explanation: False. Since steel is used in the production of automobiles, an increase in the price of steel means that producing automobiles will be expensive. Thus, less automobiles will be produced and the supply curve for automobiles will shift to the left.

Detailed explanation-3: -Due to an increase in the price of petrol with constant price of cars, consumers would be less inclined to buy cars. This is a situation of decrease in the demand or a backward shift in the demand curve.

Detailed explanation-4: -Government policies can affect the cost of production and the supply curve through taxes, regulations, and subsidies. For example, the U.S. government imposes a tax on alcoholic beverages that collects about $8 billion per year from producers.

Detailed explanation-5: -Supply is generally considered to slope upward: as the price rises, suppliers are willing to produce more. Demand is generally considered to slope downward: at higher prices, consumers buy less.