Problem Set

ECO 301Problem set 1Fall, 2009 Solutions 1. Show diagrammatically and pardon how increasing the stripped wage affects the mart for fast food. An amplification in push costs leads to a decrease in the sound’s supply. As supply falls the equipment casualty of the good rises leading(p) to a decrease in total subscribe toed. It is feasible that senior high incomes of fast food workers (assuming that these workers benefit from the higher minimum wage) baron lead to an append in the demand. Obtaining such(prenominal) an outcome requires that these workers also implement fast food. [pic] 2. Earlier this calendar month British oil color corporation announced the discovery of a major impudently oil field (estimated reserves among 3 to 15 one thousand million barrels) in the Gulf of Mexico. business from this field is counted to begin in 2-4 years. Show graphically and explain how this discovery affects the current market for oil. First , the discovery of a new oil field that go out not have for 2-4 years go forth have no effect on current demand. Granted, expected legal injurys will be displace, but consumers argon not going to tip over up driving for 2 years to take reinforcement of the price decrease. The effect of lower prices is more likely to be seen on the supply side.

oil colour companies that have special(a) reserves might choose to amplify supply in the current time period if they expect future prices to fall. The add-on in current supply causes price to fall, leading to an increase in quantity demanded of oil. [pic] 3. Demand shot is defined as the responsiveness of consumers’ quantity demanded of a good to changes in th! at goods price. If demand is inelastic consumers are relatively in crude to price changes – or the % change in quantity is little than the % change in price - and if demand is elastic consumers are relatively sensitive to price changes. The demand for cigarettes is widely public opinion to be inelastic. Given this, what can you discern about a presidential term’s motives when it...If you want to get a climb essay, parliamentary procedure it on our website: OrderEssay.net

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