Question

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.

Answer 1

Ans) Demand side determinants÷

• Change in consumer preference.
• Change in income/wealth.
• Change in price of related goods (substitute or complementary).
• Change in number of existing customers.
• Change in fashion etc.

Supply side determinant ÷

• Change in number of sellers.
• Change in price of related goods in production.
• Change in wages.
• Change in price of raw materials.
• Change in technology etc.

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 none electric cars. demand det none People increase their concern for the environment. An economic boom raises people's wealth. 22 A strike by aluminum workers raises the price of aluminum. The price of gas-powered cars falls. Jemand de

1) With improvement in technology, supply will increase and supply curve will shift to the right.

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

2) When people become more aware about the environment, they'll prefer electric cars over petrol car. Therefore, demand for electric cars will increase, and demand curve will shift to the right.

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

3) With increase in wealth, people will become more able to buy car. Therefore, demand will increase.

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

4) With increase in price of aluminium, supply will decrease. As cost of raw material is increasing.

Show the effect of the following event on the market for electric cars: A strike by aluminum workers raises the price of aluminum. O Supply Demand Supply - Price of Electric Cars - - Demand Quantity of Electric Cars

5) With decrease in price of gas powered car (a substitute good) , demand for electric car will fall.

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