If car makers are required to install gadgets to improve the cleanliness of car-exhaust, we would expect the equilibrium quantity in the car market to decrease.

(A) True

(B) False

The correct answer is True.

Explanation:

Supply and demand interact to produce a price and an amount of equilibrium, that is, a market equilibrium. The market is in equilibrium when price and quantity balance the forces of supply and the demand. At the equilibrium price, the quantity that buyers want to acquire is equal to what the sellers want to sell.

If the price were initially higher than what the market empties, producers would try to produce and sell more than consumers are willing to buy. There will be a surplus, that is, a situation in which the amount offered is greater than the sued. To sell that surplus, producers would start lowering prices.

Finally, as the price decreases, the quantity demanded would increase and the quantity offered would decrease until the equilibrium price was reached