Economists might consider the cash for clunkers program a failure because it
A)the consumer surplus gained by the new car buyers with less than the cost to society
B)not enough cars were taken off the road
C)too many cars were taken off the road
D)consumers bought foreign cars instead of domestic cars

Question

Quizplus · Accepted Answer

Economists might consider the cash for clunkers program a failure because while it did boost car sales and stimulate the economy, the consumer surplus gained by the new car buyers was less than the cost to society. This is because the program encouraged people to purchase new cars instead of keeping their old ones, which resulted in a decrease in the supply of used cars, therefore increasing their prices. Additionally, the program did not take enough cars off the road to have a significant impact on the environment.

Economists Might Consider the Cash for Clunkers Program a Failure