Question

The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the: demand curve for electric and hybrid autos will shift rightward. demand curve for electric and hybrid autos will shift leftward. supply curve for electric and hybrid autos will shift rightward. supply curve for electric and hybrid autos will shift leftward.

Answer 1

Answer:

supply curve for electric and hybrid autos will shift rightward.

Explanation:

In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply.

The law of demand states that, the higher the demand for goods and services, the higher the price it would be sold all things being equal. On the other hand, law of supply states that the higher the price of goods and services, the lower the supply.

In order to understand both short-run economic fluctuations and how the economy move from short to long run, we need the aggregate supply and aggregate demand model.

In this scenario, the battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the supply curve for electric and hybrid autos will shift rightward i.e it would increase.

In the short-run, a rightward shift in the aggregate supply (AS) curve causes output to increase and result in a price fall (lower price).