Overview
Assignment Content
Competency
Interpret supply and demand curves and market equilibrium.
Student Success Criteria
View the grading rubric for this deliverable by selecting the “This item is graded with a rubric” link, which is located in the Details & Information pane.
Scenario
Based on external shocks to our macroeconomy, it will be worthwhile to present Lightning Volt investors with possible positive and negative externalities that pertain to the electric vehicle market. Knowledge of externalities in the macroeconomy could help solidify a lucrative investment venture.
Instructions
Submit both parts in a Word document.
Part 1
Complete the three tasks below for each of the four following scenarios.
Explain the shifts in the supply and demand curves
Describe the determinants of demand and supply that would cause the curves to initially shift
Identify the new equilibrium price and equilibrium quantity
Complete the three tasks below for each of the four following scenarios.
Lightning Volt has access to capital and the most advanced technology to manufacture its electric vehicles. Due to the novelty of Lightning Volt's electric vehicles, the firm is overwhelmed with orders.
The U.S. federal government is offering tax rebates to consumers who purchase electric vehicles. Subsidies are given to U.S. electric vehicle manufacturers to fight climate change.
Consumers now have more disposable income compared than in previous years. The United States is faced with higher price levels.
The cost of intermediate goods has decreased in price. Most consumers now prefer electric vehicles over gasoline vehicles.
Part 2
Identify and explain external shocks to the macroeconomy that could affect Lightning Volt’s domestic and international sales.