In an economy dominated by private enterprises, demand for electric vehicles (EVs) rises sharply due to rising fuel prices. Battery prices increase,…

CA Foundation · Business Economics · MTP · May 2026
In an economy dominated by private enterprises, demand for electric vehicles (EVs) rises sharply due to rising fuel prices. Battery prices increase, labour wages remain constant, and profits in the EV sector exceed those in traditional automobile manufacturing. On the basis of above case, answer the following questions (66 to 68) The shift of producers from conventional vehicles to EVs primarily indicates that:
(A) A. Government planning has redirected resources
(B) B. Consumer sovereignty has weakened
(C) C. Price mechanism has altered relative profitability
(D) D. Production is guided by social welfare objectives

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. Price mechanism has altered relative profitability

Topics: Nature & Scope of Business Economics

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