Supply and Demand Shifts in Electric Car Market

Steps:

• Falling battery prices lowers production costs, shifting supply curve rightward.
• Increased environmental awareness raises consumer willingness to pay, shifting demand curve rightward.
• Rightward supply shift alone would lower equilibrium price and raise quantity.
• Combined shifts increase equilibrium quantity; net price effect depends on shift magnitudes, but both reinforce higher quantity.

Why C is correct:

• C shows new equilibrium with higher price and higher quantity, consistent with demand shift dominating supply shift per standard supply-demand model.

Why the others are wrong:

• A: Indicates lower price and higher quantity, ignoring demand increase.
• B: Suggests unchanged equilibrium, overlooking both shocks.
• D: Implies lower quantity, contradicting effects of both positive shocks.

Final answer: C