Assume the diagram below represents the market for electric cars in Ireland - Leaving Cert Economics - Question 2 - 2016

On the diagram, indicate the following:

• Label the equilibrium price as P₁ where the demand curve intersects the supply curve.
• Label the equilibrium quantity as Q₁, corresponding to the quantity at the intersection of the two curves.

1. Reduced emissions / cleaner environment / sustainable development: Electric cars produce zero emissions at the point of use, significantly improving air quality and contributing to broader climate goals.

2. Less waste of scarce resources / reduced reliance on oil / gas / less imports: Increased usage of electric cars can lead to a decrease in oil consumption, reducing the need for imports and enhancing energy security.

One potential measure is to offer a grant towards the purchase price of each new electric car purchased. This could involve providing a financial incentive, such as a €5,000 grant, to consumers, thereby reducing the overall cost of purchasing an electric vehicle.

For the factor income levels in the economy fall, the demand curve will shift.

The demand curve will shift to the left.

As income levels fall, consumers generally have less disposable income, which reduces their purchasing power. Consequently, they are less likely to buy goods and services, resulting in a decrease in demand.

For the factor the firm’s production technology improves, the supply curve will shift.

The supply curve will shift to the right.

Improvements in production technology typically increase efficiency, allowing firms to produce more at a lower cost. As a result, this encourages more supply in the market, prompting a rightward shift in the supply curve.