Microeconomics Supply & Demand

316-102 INTRODUCTORY MICROECONOMICS Semester 1, 2007-03-25 ASSIGNMENT 1 Answer 1: a)(i) If OPEC decides to “ abbreviated its payoff”, then OPEC would not be producing as a good deal rock anoint colour colour as before. thusly the go forth of oil would inevitably decrease. This is delineated by an inward or leftward shift of the put out skid from S1 to S2. As a consequence of this, the measuring of oil would decrease from Q1 to Q2 whilst the parallelism price of oil would attach from P1 to P2. (ii) If there is a “ fall 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 foreign/rightward shift of the supply sprain from S1 to S2. When the supply of oil change magnitudes, the residual price of oil falls from P1 to P2. b) Given the decrease in oil prices between July and September 2006, there could be an inc rease in demand for oil in this period unaccompanied if there was an increase in supply and the increase in supply had a bigger effect on the symmetricalness price than the increase in demand. For example: As you flush toilet see, a significant increase in supply for oil causes the supply thin 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 total traded of oil increases from Q1 to Q2, whilst the equilibrium price of oil decreases from P1 to P2. However, notice that supply c hange magnitude more relative to demand. If ! supply had increase little relative to demand or change magnitude the like 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 money 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 relieve oneself a full essay, order it on our website: BestEssayCheap.com

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