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My question says - "using an understanding of PED & PES, explain why EVs prices are...

My question says - "using an understanding of PED & PES, explain why EVs prices are so high in New Zealand."

I understand that if PED is inelastic then the demand for a product has low price sensitivity which means that the supplier can increase the price without lowering demand - and hence this can be attributed to EVs being high in price. Am I right?

I don't know how PES relates...

Does the price elasticity of supply affect the price of a product - if so, how?

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Answer #1

Price elasticity of supply affects prices as lower quantity of supply in market leads to higher demand and causes supply demand mismatch and thus prices rise.

In new Zealand the manufacture of EV is considerably lesser due to lower free trade agreements, lower manufacturing activities and high cost of labor plus low infrastructure for electricity charging for EV causing supply to be lower thus causing its prices to rise as customers demand and attractiveness is higher than quantity supplied.

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