i. Consider the market for lithium. Using a single, fully-labelled demand and supply diagram, illustrate the combined demand and supply effects that have taken place in the lithium market over the past 3 years. Discuss the factors that have driven the changes to demand and supply and the effect on equilibrium price and quantity. [Note: You do not need to use actual data for this diagram and you can assume the market is competitive as assumed in Chapter 4 of Gans et al. (2018)].
ii. Using a fully-labelled demand and supply diagram representing the market for oil, illustrate the likely long-term effects that the lithium market might have on the market for oil. Provide an explanation of your analysis as well as the relationship between the two markets. [Note: You do not need to use actual data for this diagram and you can assume the market is competitive as assumed in Chapter 4 of Gans et al. (2018)]. What effect might the increasing availability of lithium over time have on the own-price elasticity of demand for oil? [Note: You do not have to show this in your diagram]
