Business & Finance Homework Help

Choose one of the two questions to answer in a reply.

1. The “Cash for Clunkers” program

is said to have hurt the low-income population and small businesses. This program gave auto dealerships several thousand dollars when old, less fuel-efficient vehicles were traded in for new, more fuel-efficient vehicles. The old vehicles were then crushed and sold for scrap. Typically, a large portion of the money the dealership received was passed on to the consumer in order to give the incentive to trade in old vehicles for new ones. The idea was that less fuel efficient vehicles would be off of the road, and it would stimulate the auto industry. Using supply and demand analysis, describe why this could have hurt the low-income population and small businesses. 

2. Is it possible for the minimum wage to be economically inefficient? Explain. Use supply and demand analysis.