Question

Imagine that a new technology is invented that makes it very cheap to produce highly efficient solar panels that can be put on cars stuff. Give the effect in the following markets.

a. price of solar panels
b. quantity of solar panels
c. price of oil
d. quantity of oil
e. price of tires
f. quantity of tires

Answer 1

Quantity of solar panels increase , Price of solar panels decrease

Quantity of tires increase, Price of tires increase

Quantity of oil decrease, Price of oil decrease

Step-by-step explanation:

Supply is directly related to technological upgradation.

So, technical upgrade will increase ie rightwards shift the supply curve. Hence, quantity of solar panels will increase.

Increase in supply will create competition among sellers, so the price of solar panels will decrease

Tires are complementary goods to car solar panels. Price & quantity of complements are inversely related. Lower priced solar panels imply higher demand quantity of tires. Increase & rightwards shift in demand implies competition among buyers & tires' price increase.

Oil is a substitute good to solar panels. Price & quantity of substitutes is directly related. Lower priced solar panels imply lower oil demand quantity. Decrease & leftwards shift in demand curve implies excess supply & competition among sellers, so price of tires decrease.