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QUESTION ONE [30]Read the extract below and answer the questions that follow:South Africa Battery Manufacturing and Supply Market Report 2021 -ResearchAndMarkets.comThis report focuses on the manufacture of batteries and includescomprehensive information on the state of the sector includingprimary, automotive, energy storage, industrial and lithium-ionbatteries, electric vehicles, technology, recycling and otherenvironmental factors.There are profiles of nine companies including Eveready, the onlyprimary battery manufacturer in South Africa and other major brandssuch as Energizer and Duracell.Other companies profiled include AutoX, involved in the automotivebattery replacement market, and First National Battery (underMetindustrial), a major player in the original equipmentmanufacturer sector, and a supplier of industrial batteries.The Manufacture and Supply of Batteries in South AfricaDemand for lithium-ion batteries is expected to increase asinternal combustion engine vehicles lose share to electricvehicles. While South Africa has no lithium-ion battery cellmanufacturers, several companies are involved in battery packassembly.Demand for all types of batteries is also expected to come from therollout of renewable energy projects. Battery demand in SouthAfrica is being driven by the growth in the number of renewableenergy projects, an increasing number of homeowners and byindustrial and commercial users looking for a reliable energysource as load-shedding continues.Electric VehiclesGlobal sales of new energy vehicles (battery, hybrid and fuel cell)accelerated in 2020, despite the decrease in new vehicle sales dueto the pandemic.The number of electric vehicles in South Africa is small, althoughstudies indicate the importance of local vehicle manufacturersmoving away from combustion engine vehicles to ensure theindustry's long-term sustainability. Electric vehicles areexpensive and there is a limited charging infrastructure. Importtariffs are a significant inhibitor for investment in electronicvehicle manufacturing.Stationary Energy StorageIn South Africa, the energy storage market continues to grow, asnew independent power producer projects come on stream and asload-shedding continues. Load-shedding is driving demand forback-up power and uninterrupted power supply applications,particularly in commercial, industrial and agriculturalapplications where the costs of energy insecurity are high.(Source:https://www.businesswire.com/news/home/ ... arkets.com)1.1 Taking the article into consideration, explain what is likelyto happen to prices of batteries due to the aforementioned changesin demand and/or supply. (15)1.2 Given the nature of electric cars, explain the importance ofprice elasticity of demand to electric car manufacturers.