Price elasticity of supply (PES) — practice question

It is forecast that electric-powered driverless cars will be on the roads by 2030. Driverless cars have already been trialled on roads in some cities, including Pittsburgh in the USA. It is believed that driverless cars will cut accidents, have lower repair costs and produce less pollution. At the start, supply of driverless cars may be greater than demand, but they are expected to become popular quite quickly. As more driverless cars are used, demand for bus travel and petrol stations may fall, and some taxi drivers may lose their jobs. By contrast, because driverless cars will give more people, including the elderly, easier access to transport, demand for out of town restaurants and places of entertainment is likely to rise. It has been predicted that the technology being developed for driverless cars will make their supply elastic. A rise of $8\%$ in the price of driverless cars is predicted to lead to a $20\%$ increase in the quantity supplied. Technological progress and the substitution of workers by machines are expected to eliminate $80$ million jobs in the USA. Job losses are also forecast in other countries, and trade unions are likely to find it harder to resist this because membership is falling and governments are reducing the power of trade unions. Occupations thought to face risk include accountants, train drivers and financial advisers. Demand for workers in other jobs, including doctors and dentists, may rise, but unemployment may still increase. The better educated workers are, the more readily they can switch from one occupation to another. Table 1.1 shows education spending as a percentage ($\%$) of GDP and the unemployment rate in selected countries. Jobs selling houses and flats may fall, but demand for building workers is expected to rise. Some people approve of house building in their area, while others are against it.