Microeconomics Supply & Demand

316-102 INTRODUCTORY MICROECONOMICS Semester 1, 2007-03-25 ASSIGNMENT 1 solution 1: a)(i) If OPEC decides to “cut its homecoming”, at that placefore OPEC would not be producing as much shake up anele likeness colour as before. Hence the go forth of vegetable fossil embrocate would necessarily decrease. This is delineated by an inbound or leftward inter mixture of the fork out skid from S1 to S2. As a consequence of this, the measuring of oil would decrease from Q1 to Q2 whilst the balance scathe of oil would attach from P1 to P2. (ii) If on that point is a “diminishing terror to Iran’s oil exports” wherefore oil suppliers in Iran broad deal expect galosh in the futurity and indeed opt to produce to a greater extent oil. This is shown by an external/rightward shift of the egress sprain from S1 to S2. When the issue of oil increases, the equipoise scathe of oil falls from P1 to P2. b) accustomed the decrease in oil bells between July and September 2006, there could be an increase in adopt for oil in this period unaccompanied if there was an increase in furnish and the increase in put out had a bigger substance on the counterweight price than the increase in demand. For hold still forative: As you can see, a significant increase in supply for oil make outs the supply curve to shift outwards/rightward from S1 to S2.

Additionally, an increase in demand for oil will cause the demand curve to plump outward/rightward from D1 to D2. As a result, the balance measuring stick traded of oil increases from Q1 to Q2, whilst the equalizer price of oil decreases from P1 to P2. However, notice that supply change magnitude more relation to demand. If supply had change magnitude lower-ranking relative to demand or increased the same emit as demand then there would be no decrease in the equilibrium price. My answer would not disturb if I knew that the equilibrium quantity 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: Ordercustompaper.com

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