Question

During the obama administration, the development of low-cost batteries for electric cars received large amounts of federal funding in terms of subsidies. meanwhile, american households gave a higher priority towards minimizing their environmental impact. consider the market for zero-emissions electric vehicles where there is an upward-sloping supply curve and a downward-sloping demand curve.

Answer 1

The policies of the government directly affect how people react to certain things. When the government supports and believes in alternative source of energy they will approve fundings and subsidies efforts that will help promote or make that policy effective and this was the case of the Obama Administration. Moving towards the ideal levels of lowering the dependance on fossil fuel is not only good for the American economy in terms of not having to import refined crude oil for the transport and aviation industry but it's good for the environment at large.

Answer 2

Answer: The Demand will rise, Supply will rise leading to an increase Equilibrium Quantity

Explanation:

The Car battery is an input in the production of an eletric car. therefore when the government funds the development of low-cost battery, the car battery selling price will be lower which means manufacturers/producers of Electric cars will buy the low cost battery (which is an input in Electric-Car Production) at a low price and total cost of production will decrease. A decrease in the costs of production will cause a rise in Supply because suppliers can produce more eletric cars at a low cost.

American household gave a high priority towards minimizing their environmental impact, this will definitely cause a rise in demand because the eletric car has minimal impact on the environment. Electric cars are in line with their priority of minimizing environmental impact.

demand will rise and supply will rise which will cause an increase in equilibrium quantity