Question 5: ihe following diagram depicts the average oil price (red trend), for

Question

Question 5: ihe following diagram depicts the average oil price (red trend), for the period 2001-2010, as well as the World's oil production (blue trend) and OPEC's oil production (green trend), for the same time period. World and OPEC Oil Production and Price 2001 to 2010 80,000T T $140 70,000 $120 a 60,000 50,000 40,000 30,000 20,000 10,000 $80 $60 a $40 $20 $0 ?World Production-OPEC Production Price From this diagram, we conclude that: A. Oil production is inelastic B. Oil consumption is unit elastic X Oil production is unit elastic I Flag il production is elastic Question 6: Consider the UAE government introducing an effective minimum wage rate in the country. Which of the following statements is correct? A. Firms, demanding labor, will be made better off after the introduction of the effective minimum wage rate B. Workers, already employed, will be made worse off after the introduction of the effective minimum wage rate (assume that the wage rate of employed workers before the introduction of the policy is determined exactly by the forces of free-market) C. The whole society (i.e., firms and workers together) will be made worse off after D. The whole society (i.e., firms and workers together) will be made better off after the introduction of the effective minimum wage rate introduction of the effective minimum wage rate

Explanation / Answer

5)The world and OPEC countries oil production is more or less the same throughout the period of study. But the price of oil is subject to large fluctuations throughout the period. Thus, it can be seen that the change in price of the good does not has much effect on the quantity of oil supplied or produced. Thus it can be concluded that the production of oil is inelastic in nature.

A) oil production is inelastic in nature.

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6) When the UAE government sets a effective minimum wage rate in tyhe country, it means that the wage rate can not fall below the minimum wage rate and in turn it also helps the firms in paying lower wages to the workers compared to the situation when the wage rate was determined by the free market forces.

B)Workers, already employed will be made worse off after the introduction of the effective minimum wage rate.

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