A rare and scarce earth metal known as Neodymium is used in many consumer and military products including smart-phones,smart-bombs,laptop computer monitors,and electric/hybrid cars.In one year's time,the price of Neodymium has gone from $19/lb.to $129/lb.Under these circumstances and the fact that at least 1 kilogram is used in each electric car that is assembled,a graph of the supply and demand for this product would show:

Question

Quizplus · Accepted Answer

The significant increase in the price of Neodymium suggests a shortage in supply compared to the current level of demand. As a result, the market price has increased above the equilibrium price, which is where the quantity demanded is equal to the quantity supplied. The shortage in supply can cause buyers to compete for the product, driving up the price even further. The increase in price may also lead to a decrease in demand from consumers who cannot afford the higher price.

A Rare and Scarce Earth Metal Known as Neodymium Is