1.Identify two demand-related and two supply-related reasons why the equilibrium
ID: 1160927 • Letter: 1
Question
1.Identify two demand-related and two supply-related reasons why the equilibrium price of automobiles would rise.
2.Using the example of the gasoline market, explain how price acts as a rationing tool. Are there other ways to ration gasoline among consumers? Explain.
3.In Economics, we differentiate between peoples’ “wants and needs” and their “resources”. Explain what these terms mean and how they are used in understanding economic decision-making.
4.Explain the difference between a decentralized price system and a centralized command and control system. Provide an example of each from the U.S. economy.
5.Differentiate between Absolute Advantage and Comparative Advantage. Is it necessary for a country to have Absolute Advantage in the production of a good in order to have Comparative Advantage in it? Explain your answer.
Explanation / Answer
The demand related reasons leading to a price increase for the automobiles are as follows:
The supply related reasons leading to a price increase for the automobiles are as follows:
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