each event given below, respond to the following points using the determinants o
ID: 1231767 • Letter: E
Question
each event given below, respond to the following points using the determinants of demand and supply:A. Determine whether demand or supply changes or if the event instead causes a change in quantity demanded or quantity supplied.
B. State whether the change is an increase or decrease.
Microeconomics: Week 2 STUDY GUIDE
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C. List the determinant that led you to that conclusion.
Events
1. The price of oil increases because OPEC reduces oil production.
2. The tax on gasoline consumption increases.
3. Firms start producing more fuel efficient vehicles and produce fewer vehicles that use fuel inefficiently.
4. Summer arrives and more people choose to take vacations.
5. The price of gasoline increases.
6. The price of ethanol, a complement good, increases.
7. There is a large oil spill in the Gulf of Mexico.
8. Incomes fall because a recession begins and gasoline is a normal good.
9. Consumers desire more electric powered vehicles instead of gasoline powered vehicles.
10. A new production method allows for twice as much gasoline to be refined per day.
Explanation / Answer
1)event led to decrease in supply thereby increasing the prices 2)event led to decrease in demand for gasoline due to increase in taxes 3)demand falls for fuel ineffecient vehicles resulting in their reduced production 4)event led to increase in demand for vacations 5)demand for gasoline drove its prices high 6)the price of ethanol increases due to less demand for gasoline its complement 7)event leads to increase in price due to decrease in supply 8)event leads to decrease in demand for gasoline due to decrease in income(normal good) 9)demand leads to increase in demand for electric and less demand for gasolines as a result reducing its price 10)event leads to more gasoline supply and hence price decreases
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