In the market for electric cars, assume the following two events happen simultaneously: Increase in Consumer Preferences for Electric Cars: Due to growing environmental concerns, there is a significant increase in consumer preference for electric cars over gasoline cars. This change leads to more consumers wanting to buy electric cars. Advancement in Battery Technology: At the same time, there is a major breakthrough in battery technology. This advancement makes it cheaper and more efficient to produce electric cars, leading to a decrease in the cost of production for manufacturers. Based on these two events: a) Explain how each event affects the demand and supply curves for electric cars. b) Predict the overall effect on the equilibrium price and quantity in the market for electric cars. Please submit your answers with the appropriate supply and demand figure below. Make sure to label the axis (what is measured along them), and the lines in the figure (demand and supply), and show how those two events shifted which lines.
In the market for electric cars, assume the following two events happen simultaneously: Increase in
Consumer Preferences for Electric Cars: Due to growing environmental concerns, there is a
significant increase in consumer preference for electric cars over gasoline cars. This change leads to
more consumers wanting to buy electric cars. Advancement in Battery Technology: At the same time,
there is a major breakthrough in battery technology. This advancement makes it cheaper and more
efficient to produce electric cars, leading to a decrease in the cost of production for manufacturers.
Based on these two events: a) Explain how each event affects the
electric cars. b) Predict the overall effect on the
electric cars. Please submit your answers with the appropriate
Make sure to label the axis (what is measured along them), and the lines in the figure (demand and
supply), and show how those two events shifted which lines.
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