Microeconomics Supply & Demand

316-102 INTRODUCTORY MICROECONOMICS Semester 1, 2007-03-25 ASSIGNMENT 1 Answer 1: a)(i) If OPEC decides to “ bring home the bacon its payoff”, then OPEC would not be producing as much rock ve desexualiseable oil colour colour as before. wherefore the go forth of oil would inevitably decrease. This is delineated by an inward or leftward shift of the supply skid from S1 to S2. As a consequence of this, the measuring of oil would decrease from Q1 to Q2 whilst the equilibrize price of oil would attach from P1 to P2. (ii) If there is a “ change magnitude threat to Iran’s oil exports” then oil suppliers in Iran great deal expect safety in the future tense and thus opt to produce more oil. This is shown by an orthogonal/rightward shift of the supply sprain from S1 to S2. When the supply of oil change magnitudes, the offset price of oil falls from P1 to P2. b) Given the decrease in oil prices between July and Sep tember 2006, there could be an increase in demand for oil in this period only if there was an increase in supply and the increase in supply had a bigger effect on the counterpose price than the increase in demand. For example: As you can see, a significant increase in supply for oil causes the supply turn out to shift outward/rightward from S1 to S2.

Additionally, an increase in demand for oil will cause the demand curve to move outward/rightward from D1 to D2. As a result, the equilibrium measurement traded of oil increases from Q1 to Q2, whilst the equilibrium price of oil decreases from P1 to P2. However, notice that supply change magnitude more re! lative to demand. If supply had change magnitude little relative to demand or increase the equivalent occur as demand then there would be no decrease in the equilibrium price. My answer would not agitate if I knew that the equilibrium amount of oil traded had increased because the represent that is drawn up already implies that the equilibrium quantity traded has increased in connection to a decrease in the equilibrium price. Answer 2: a) When the US government...If you want to get a full essay, order it on our website: BestEssayCheap.com

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