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Cobalt is a key metal used in the batteries of electric cars - Edexcel - A-Level Economics A - Question 2 - 2021 - Paper 1
Question 2
Cobalt is a key metal used in the batteries of electric cars. China is the world’s largest producer of electric cars but has recently cut subsidies to its manufactur... show full transcript
Worked Solution & Example Answer:Cobalt is a key metal used in the batteries of electric cars - Edexcel - A-Level Economics A - Question 2 - 2021 - Paper 1
Step 1
Draw a supply and demand diagram
Answer
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Start by drawing the initial supply (S) and demand (D) curves intersecting at equilibrium point E.
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Indicate a rightward shift in the supply curve (S to S1) due to the increase in small-scale mines producing cobalt.
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Show a leftward shift in the demand curve (D to D1) reflecting the impact of reduced subsidies in China.
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Label the new equilibrium point as E1, where S1 and D1 intersect. This new equilibrium indicates a lower price for cobalt (P1) as compared to the initial price (P).
Step 2