microeconomics/ 22 hours

Microeconomics

Task

· Individual task

· Format: Document. PDF

· Description and information of the task:

Read the following information about the market of electric vehicles that will help you to answer question 1. and 2. All required information is in the text. You do not need to search for further information.

Electric vehicle. Market summary. Europe.

The electric vehicle market is growing worldwide 22.6% yearly, being Europe the most dynamic market. Due to the COVID-19 pandemic, many countries had imposed a complete lockdown of more than two months. Moreover, manufacturers of the automotive industry are facing restrictions in the supply of technological inputs, like the chips for the electronic components.

Leaving aside the pandemic situation, the sales of electric cars in Europe are driven by the growing concern of the population about the effects of the carbon emissions. Another factor influencing the market of the electric vehicles is rise of the price of the gasoline, which makes traditional vehicles less affordable for the consumers.

Governments are also playing an important role by implementing restrictions to the circulation of petrol fueled vehicles. Moreover, some countries are imposing especial taxes to the producers of traditional vehicles, who must pay additional duties for each unit of petrol fueled vehicles produced. Another measure adopted by the governments are direct subsidies to the citizens for the acquisition of an electric vehicle.

The production costs of electric vehicles have been affected by the scarcity of lithium (a key component of the batteries for electric vehicles). Despite this fact, producers of traditional vehicles are adapting their factories to increase the production of electric vehicles.

Some public administrations have announced the replacement of the actual float of fuel vehicles by electrical ones, being the public transport, official cars and the cleaning services the main priorities.

(Text adapted from McKinsey (2020), Allied Market Research (2021) and IEA (2021))

1) Considering the above text, find all the facts which affect to the supply or to the demand of the market of electric vehicle. Create a table according to the following format: (The first factor is given as example)

Facts	Affects Supply / Demand	Increase / Decrease	Effect on Prices	Effect on Quantities
Growing concern of the population about the pollution	Demand	Increase	Up	Up
…..

2) Regarding to market of personal vehicles, we have observed that when prices of electric vehicles have decreased, the quantity demanded of fuel vehicles has decreased as well.

Explain the reasons why is this happening How do you call it in microeconomic terms?

Price Elasticity and Market Equilibrium

3. Recent research about the European has showed the following figures:

Price (€)	Demand (units)	Supply (units)
63,000	590,000	549,200
56,700	663,750	494,430

a) Calculate the price elasticity of the demand and the price elasticity of the supply for the interval of prices of the table. Use the midpoint method. Which one (supply or demand) is more elastic?

b) Calculate the market equilibrium point. Show the full development of your calculations.

Formalities:

· Font: Arial 12,5 pts.

· Text alignment: Justified.

Submission:

· Via Moodle

· Deadline: November 27th 23:59

Weight: This task is a 40% of your total grade for this subject. It assesses the following learning outcomes:

· Demonstrate an understanding of economic decision-making of different actors.

· Understand the relationship between economic theory and practice

· Evaluate real life situations with practical application of the acquired tools and knowledge

Rubrics

	Exceptional 90-100	Good 80-89	Fair 70-79	Marginal fail 60-69
Knowledge & Understanding (20%)	Student demonstrates excellent understanding of key concepts and uses vocabulary in an entirely appropriate manner.	Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary.	Student understands the task and provides minimum theory and/or some use of vocabulary.	Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary.
Application (30%)	Student applies fully relevant knowledge from the topics delivered in class.	Student applies mostly relevant knowledge from the topics delivered in class.	Student applies some relevant knowledge from the topics delivered in class. Misunderstanding may be evident.	Student applies little relevant knowledge from the topics delivered in class. Misunderstands are evident.
Coherence (30%)	Student shows excellent ideas that are coherent with the context of analysis drawing outstanding conclusions.	Student shows good ideas that are coherent with the context of analysis drawing valuable conclusions.	Student provides ideas that are not very accurate and coherent with the context of analysis drawing	Student makes poor analysis and coherence in his ideas.
Communication (20%)	Student communicates their ideas extremely clearly and concisely, respecting word count, grammar and spellcheck	Student communicates their ideas clearly and concisely, respecting word count, grammar and spellcheck	Student communicates their ideas with some clarity and concision. It may be slightly over or under the wordcount limit. Some misspelling errors may be evident.	Student communicates their ideas in a somewhat unclear and unconcise way. Does not reach or does exceed wordcount excessively and misspelling errors are evident.