(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
This problem is asking you to identify the effects to the market of defective tires used on the trucks. It may help to review Tables 3-1 and 3-2 before doing this problem.
(Description)
The coordinate plane with the horizontal x-axis and the vertical y-axis is drawn.
The horizontal axis is labeled as Quantity of trucks. It is measured from 0 to 20 million with a break between 0 and 11 million.
The vertical axis is labeled as Price of truck. It is measured from 0 to 45000 dollars with a break between 0 and 15000 dollars.
There are two lines on the coordinate plane.
The first line, which is labeled Demand, passes through points with the following coordinates: 12 and 40000, 20 and 20000.
The second line, which is labeled Supply, passes through points with the following coordinates: 14 and 20000, 18 and 40000.
These two lines intersect at the point with coordinates, 16 and 30000.
(Speaker)
The defective tires will cause demand to decrease as consumers become fearful of driving trucks with bad tires.
(Description)
The line Demand shifts downwards while retaining the same slope. Now the line Demand passes through the following points: 11 and 35000, 15 and 25000, 19 and 15000.
A dotted vertical line from 15 million trucks on the x-axis up to 25000 dollars on the y-axis is drawn. Another dotted horizontal line from 25000 dollars on the y-axis to 15 million trucks on the x-axis is drawn. The both lines intersect at the point with coordinates, 15 and 25000.
(Speaker)
The supply line will remain constant. The defective tires will not impact the production decisions of the firm. The firm will simply respond to the change in demand by supplying a fewer quantity of trucks. The decrease in demand will also cause price to decrease.
(Description)
The lines Demand and Supply intersect at the point with coordinates, 15 and 25000.