Answer to Question #115660 in Microeconomics for Gabrilla

Question

If gas prices fell sharply, what would economists expect to happen in the market for fuel-efficient hybrid cars?

Answer 1

Due to a decrease if fuel prices, there will be a decrease in the price and quantity of hybrid cars.This is attributed to the fact that there would be a decrease in the demand for hybrid cars. Consequenctly, decrease not only their price but also their quantity.