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Supply · Paper 3 — Free Economics HL Practice Questions
1ChallengeSAQ-LFactors affecting supply10 marksPaper 3~15 min
The global market for lithium carbonate, a key input in electric vehicle (EV) batteries, experienced significant changes in 2023. The price of lithium carbonate fell from USD 60 000 per tonne in January to USD 40 000 per tonne in December. Over the same period, the quantity of EVs supplied to the global market increased by , while the price of EVs fell by . A major lithium producer, Albemarle Corp, reduced its mining output by citing lower profitability. Tesla reported a improvement in battery production efficiency due to new automation technology.
(a)
Calculate the price elasticity of supply (PES) for lithium carbonate, using the data provided. [2 marks]
(b)
Using a supply and demand , explain two distinct factors from the data that caused the supply curve for EVs to shift rightward during 2023. [4 marks]
(c)
Evaluate the likely impact of falling lithium prices and improved battery production efficiency on the long-run profitability of EV manufacturers such as Tesla. [4 marks]
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