The document describes three scenarios that could impact the market for electric cars:
Scenario D states that improved battery technology lowers electric car production costs. Scenario E notes that electric and gas cars are substitutes, and rising gas prices would increase demand for electric cars. Scenario F combines the effects of Scenarios D and E occurring simultaneously. The assistant is asked to determine how each scenario would impact demand, supply, price, and quantity in the electric car market.
Problem 2 For this problem- consider the market for electric cars (e-g.docx
1. Problem 2 For this problem, consider the market for electric cars (e.g., Nissan Leaf). Each
scenario described below will have an effect on this market. You must identify how the change
described in that scenario affects the demand curve or supply curve (or both) in the electric car
market. You must also determine how that change affects the equilibrium price ( P ) and quantity
( Q ) in the electric car market. - Scenario D - Improved technology substantially lowers the price
of the batteries used as an essential input for the production of electric cars. - Scenario E-Electric
cars and traditional, gasoline-powered cars are (consumer) substitutes. The price of gasoline-
powered cars rises (perhaps due to a tax). - Scenario F - Both changes (Scenarios D and E) occur
simultaneously You can write your answers for Problem 2 in the following table. Your answer in
each cell should be that effect on demand, supply, price, or quantity is an increase, a decrease, no
change, or unknown. begin{tabular}{|l|l|l|l|l|} hline & Effect on Demand & Effect on Supply &
Effect on Price & Effect on Quantity hline Scenario D & & & & hline Scenario E & & & &
hline Scenario F & & & & hline end{tabular}