3. Problems and Applications Q3 Consider the market for electric cars. Assume electric cars are a…
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Question “3. Problems and Applications Q3 Consider the market for electric cars. Assume electric cars are a…”
3. Problems and Applications Q3 Consider the market for electric cars. Assume electric cars are a normal good. For each of the following events, identify which of the determinants of demand or supply are affected. If demand is unaffected by this event because it creates only a supply change, select the “None” option under the “Demand Determinant” column. Similarly, if supply is unaffected by this event because it creates only a demand change, select the “None” option under the “Supply Determinant” column. Event Demand Determinant Supply Determinant Engineers develop new automated machinery for the production of electric cars. People increase their concern for the environment. An economic boom raises people’s wealth. A strike by aluminum workers raises the price of aluminum. The price of gas-powered cars falls.
Show the effect of the following event on the market for electric cars: Engineers develop new automated machinery for the production of electric cars. Supply Demand Supply Price of Electric Cars Demand Quantity of Electric Cars
Show the effect of the following event on the market for electric cars: People increase their concern for the environment. Supply Demand Supply Price of Electric Cars Demand Quantity of Electric Cars
Show the effect of the following event on the market for electric cars: An economic boom raises people’s wealth. -O- Supply Demand Supply Price of Electric Cars Demand Quantity of Electric Cars
Show the effect of the following event on the market for electric cars: A strike by aluminum workers raises the price of aluminum. Supply Demand Supply Price of Electric Cars Demand Quantity of Electric Cars
Show the effect of the following event on the market for electric cars: The price of gas-powered cars falls. Supply Demand Supply Price of Electric Cars Demand Quantity of Electric Cars
Answer
Ans) Demand side factors/
Consumer preferences are changing.
Changes in income/wealth
Price changes for related goods (substitute, or complementary).
Increase in the number of customers.
Fashion changes, etc.
Supply side determinant
Increase in the number of sellers
Price changes in related goods during production
Looming wages may change
Price changes in raw materials
Technology changes, etc.
1) Technology will improve the supply and the supply curve will shift to one side.
2) People will choose electric cars over petrol cars if they are more conscious about the environment. The demand for electric cars will rise, and the demand curve will shift to its right.
People will be able to afford a car more easily as they become wealther. Thus, the demand for cars will rise.
4) As aluminium prices rise, so will the supply. The cost of raw materials is rising.
5) As gas prices fall (a substitute product), electric car demand will also drop.
3. Problems and Applications Q3 Take into account the market for electric vehicles. Consider electric cars as a normal product. Each of the following events will affect demand and supply. Select the “None” option in the “Demand Determiner” column if this event does not affect demand. The “Supply Determineant” column will also allow you to select the “None”, if the event creates only demand changes, and supply is not affected by it. Event Demand Determinant Supply Determinant Engineers create new automated machinery to produce zero-emission cars. Demand det none People are more concerned about the environment. A boom in the economy increases people’s wealth. 22 Strikes by aluminum workers increase aluminum’s price. Gas-powered cars are less expensive. Jemand
The following event has an impact on the electric car market: Engineers create new automated machinery to produce electric cars. Electric Cars: Supply and Demand Demand Price
The following events have an impact on electric car sales: People become more concerned about the environment. Electric Cars Supply Demand Electric Cars Supply Price Electric Cars Demand Electric Cars Quantity
The following events have an impact on the electric car market: An economic boom increases people’s wealth. -O- Supply Demand Supply Price Electric Cars Demand Quantity Electric Cars
The following event has an impact on the electric car market: An aluminum worker strike raises aluminum’s price. O Supply Demand Supply – Price of Electric Cars. – Demand Quantity.
The following event will have an impact on the electric car market: Gas-powered cars fall in price. Electric Cars Supply Demand Electric Cars Supply Price Electric Cars Demand Electric Cars Quantity
Conclusion
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