Suppose there is a surge in the popularity of Electric

Solution

Increased popularity pf EVs leads to a Rightward Shift in the Demand Curve. This causes price to rise and quantity to rise. Reduced production costs lead to a Rightward Shift in the Supply Curve which causes price to fall and quantity to rise. Since both shifts move quantity in the same direction (increase), the Equilibrium Quantity will definitely increase.   The increase in demand tries to push the price up, while the increase in supply tries to pull the price down. The final direction of the price depends on which shift is larger. Therefore, the change in price is ambiguous (cannot be determined without more data). In general, if: ·        Increase in demand > increase in supply, price rises ·        Increase in demand < increase in supply, price falls ·        Increase in demand = increase in supply, price stays same