By 2020, Automobile Market Analysts Expect That the Demand for Electric

question 40

Multiple Choice

By 2020, automobile market analysts expect that the demand for electric autos will increase as buyers become more familiar with the technology. However, the costs of producing electric autos may increase because of higher costs for inputs (e.g., rare earth elements) , or they may decrease as the manufacturers learn better assembly methods (i.e., learning by doing) . What is the expected impact of these changes on the equilibrium price and quantity for electric autos?

• A) Unambiguously higher equilibrium price and quantity
• B) Unambiguously higher price, and equilibrium quantity may be higher or lower
• C) Unambiguously higher quantity, and equilibrium price may be higher or lower
• D) We cannot form any unambiguous expectations for either price or quantity.

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Definitions:

Emphysema

A long-term, progressive disease of the lungs that primarily causes shortness of breath due to over-inflation of the air sacs (alveoli).

Pneumothorax

The presence of air or gas in the pleural space that causes collapse of the lung.

Chronic Bronchitis

A long-term inflammatory condition of the bronchi in the lungs, characterized by persistent coughing and mucus production.

Coarse Rhonchi

Low-pitched, rattling lung sounds that can be heard through a stethoscope, often indicating the presence of thick mucus or blockages in the larger airways.