1. \"f price rises, then demand decreases. But if demand decreases, then equilib
ID: 1139529 • Letter: 1
Question
1. "f price rises, then demand decreases. But if demand decreases, then equilibrium price will fall. Therefore one cannot say with certainty what the net effect of an initial increase in price will be." Evaluate this statement. After Hurricane Katrina the price of gasoline increased bec refineries on the Gulf Coast. How would an economist use supply-and-demand analysis to explain the increase in the price of gasoline in the United States right after Hurricane Katrina? 2. cause of extensive damage to 3. A major political issue in the United States since the PB oil spill the Gulf of Mexico is whether or not to allow drilling for oil offshore in deep water to continue. There are believed to be large deposits of oil based on the results of exploration and drilling in the deeper water areas there. Use the supply and demand model to explain the likely effect on the supply and demand for oil time if drilling is prohibited, other things held constant. 4. In recent years the price of natural gas has decreased relative to the price of coal., Both of these fuels are used to produce electricity. What would the supply and demand model predict would have happened to the demand for oil used to produce electricity? Are and natural gas substitutes or complements?Explanation / Answer
1) Yes it is true that, when the price is rises , quantity demanded falls because price and quantity demand are inverse related to each other . as the price is higher, the supply become more , quantity demanded falls, whice create surplus in the market and therefore which decrease the equilbruim price in the market . hence the market reaches the equilbruim . the net effect of rise of price of any good will eventually decrease the quantity demanded but in the long run, the market reached the new equilbruim price which is lower than the original price . lets say anothing thing, when quantity demanded falls, the equilbruim price falls, if the equilbruim price is falls, then the producer decrease the supply and hence supply decrease which again increase the equilbruim price. so we can evaluate that the net effect of rise in price will eventually lead to the market to its original equilbruim point.
2) please upload it againt. it against chegg policy.
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