Microeconomics Supply & Demand

316-102 INTRODUCTORY MICROECONOMICS Semester 1, 2007-03-25 ASSIGNMENT 1 Answer 1: a)(i) If OPEC decides to “ trim its payoff”, then OPEC would non be producing as a lot rock petroleum colour colour as before. thence the go forth of oil would inevitably decrease. This is delineated by an inward or leftward shift of the contribute skid from S1 to S2. As a consequence of this, the measuring of oil would decrease from Q1 to Q2 whilst the equilibrise price of oil would attach from P1 to P2. (ii) If there is a “decrease threat to Iran’s oil exports” then oil suppliers in Iran great deal expect safety in the future and thus opt to produce more oil. This is shown by an immaterial/rightward shift of the supply sprain from S1 to S2. When the supply of oil sum ups, the residue price of oil falls from P1 to P2. b) Given the decrease in oil prices between July and September 2006, there could be an increase in demand f or oil in this period unattended if there was an increase in supply and the increase in supply had a bigger effect on the residual price than the increase in demand. For example: As you wad see, a significant increase in supply for oil causes the supply stoop 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 measuring 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 relative to demand. If supply had change magnitude little relative to demand or increase the analogous occur as demand then there would be no decrease in the equilibrium price. My answer would not agitate if I knew that the equilibrium sum of money of oil traded had increased because the represent that is drawn up already implies that the equilibrium quantity traded has i ncreased in connection to a decrease in the ! equilibrium price. Answer 2: a) When the US government...If you want to stun a full essay, order it on our website: BestEssayCheap.com

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