Answer to Question #76853 in Economics for SHEHZAAD

Question

3.1 In the market for cars, the trade union has successfully negotiated a 20% increase in wages for workers in this sector. With the aid of a well labelled diagram, explain the effect of the wage increase (ceteris paribus) on the supply of cars. (6 marks)
3.2 In 3.1 above, with the aid of a well labelled diagram describe the effect an improvement in worker productivity (ceteris paribus) will have on the supply of cars. (6 marks)
3.3 Briefly explain ANY FOUR (4) determinants of supply for the car market in your country. (8 marks)

Answer 1

3.1 The wage increase will increase the costs of production, so the supply of cars will decrease.
3.2 An improvement in worker productivity will increase the supply of cars.
3.3 The FOUR determinants of supply for the car market in your country are natural conditions, technical progress, change in factor prices and transport improvements.
Source:
https://www.economicsdiscussion.net/supply/7-factors-which-affect-the-changes-of-supply/1645