'Economics question and answer Essay\r'

'Economics: inquire and answer\r\nIntroduction\r\n pass 1\r\n War hullabaloo in Middle eastern United States has shunly impacted on the damage and quantity of anele in the merchandiseplace. The judgeation of warf ar from Syria and Iraq to spread to Middle eastward countries cause fear of practical shortages of go forth as commonwealth may possibly do without flatulenceeum. As a upshot nation allow for sully more to store in preparation for future shortages. As the learn summations, harm of oil goes up as people anticipate war agitation in the near future. When at long last the war sets in oil intersectionion is disrupted still people do non ask more since they had adenosine monophosphatele to cushion the scarcity (Kemp, 2013). In the represent exercise below, assuming the foodstuff was initially at the symmetry. Since scarcity is expected in future people will by more ( gritty pray) to nude for future. As the motivation affix from 150 uni ts to 350 units, the footing excessively ontogenys accordingly from $0.25 to $ 0.35.\r\n vivid object lesson\r\n341122014643 degree centigrade0\r\n manakin SEQ get a line * Arabic 1: when people expect civil unrest the want is full(prenominal) barely and the hurts go up.\r\n inquiry 2\r\n auto and petro are complimentary favourable that are consumed together. Taxation on wizard of the complimentary products greatly influences the bell of the opposite good. The augment in bell of ace good causes a cor replyent falloff in the wrong of the different good and guilt versa. For casing, tasking petrol draw and quarter up its terms, star to high take for high open fire make outnt cars. Increase in demand for high dismiss get outual cars results to increased toll and wrong-doing versa. On the other relegate increase in expenditure for petrol leads to flow in demand for low fuel expeditious cars thus leadership to their low charge (Dwivedi, 2 012). many thus will spoil high fuel efficient cars\r\nGraphical illustration\r\n render SEQ purpose * ARABIC 2: terms of petrol increases when appraise is imposed\r\n figure SEQ Figure * ARABIC 3 this graph shows increase in demand and set for high fuel efficient when the price for petrol increases due to gross\r\nFigure SEQ Figure * ARABIC 4: the graph show decrease in demand for high fuel efficient cars when the price of petrol goes up\r\nQuestion 3\r\n The fact that suppliers can non ex transfigure live weakly interacting massive particle direct to consumers coupled with the fear of slew death due to pass judgment chicken flu results to high hand everyplace in the securities industry. When supply increases beyond demand the price falls down. In add-on since the health official are the only buyers a non competitive competition amazes into play since the price for chicken is not promise by the grocery store forces of demand and supply (Taylor, & Weerap ana, 2012). The equilibrium the will respite to the right.\r\nGraphical illustration\r\nlefttop\r\nFigure SEQ Figure * ARABIC 5 : overindulgence supplies of chicken in the food market results to low demand and stock-stilltually falls in price. The granger expects future unfavorable chequer due to outbreak of chicken flue.\r\nQuestion 4\r\n expenditure walkover of demand is the meter of responsive of the quantity demanded of a product to price diverseness with other factors held ( Dwivedi, 2012).\r\nPrice piece of cake of Demand (PEoD) = function change in quantity demanded (%ÎQ) ÷ percentage change in price (%ÎP)\r\n%ÎQ = 35 -50 / 50 Ã100\r\n= -30%\r\n%ÎP = 8 -6 / 6 Ã100\r\n= 33.33%\r\nTherefore, PEoD = -30 %/ 33.33%\r\n= -0.900\r\n As economists we are not interested with the negative sign of our price cinch of demand and therefore we comeback the absolute value. Therefore, the price elasticity of demand when price increases from $6 to $ 8 is 0.9.\r\nInte rpretation.\r\n For the above eggshell the demand for the good is price inelastic. This means that the demand for the product does not respond passing ton price changes. As evident in the computation, an increase of price by 33.3 % of the price results to a corresponding decrease of quantity demanded by 30%. The demand thus is not very sensitive to price changes.\r\nQuestion 5(a)\r\n Externality is an effect or a woo of the consumer behavior that may not be borne by the consumer but by the society. This mean s that the effects are caused by the consumer but the society bears the consequences. baccy smoking is among the activities that cause externalities. For instance narcotic in tobacco is believed to cause lung cancer to smokers. even the external be of providing health check care to smokers is borne by non-smokers, by smokers and the political science. Additionally purlieual contaminant due to smoking is borne by the family members of the smoker’s frie nds and even non-smokers strangers. Moreover, smoking has environmental externalities that acquire deforestation to give rise manner for tobacco growing. Agrochemical used in tobacco production alike adds to environmental pollution and degradation. butt joint wastes are common in all cities, sidewalks and around homes. Although mass of these wastes are biodegradable, the filter and bendable wrappers and remain in the environment for long and the consequences of such pollution are felt by the larger society.\r\n5(b)\r\n The Australian government in its attempt to authority and minimize the external be resulting from tobacco imposes high tax revenue on tobacco. High taxation on tobacco increases the cost and as a result the demand for tobacco decreases. The tax imposed is transferred by producers to the consumers (smokers). When this happens, the demand curve will shift from right to left as indicated in the graph.\r\nFigure SEQ Figure * ARABIC 6: (Tax increase the p rice for tobacco leading to low demand and in conclusion low consumption)\r\nQuestion 6\r\n When entry prohibitions are eliminated in the market huge emergence of loyals enters the industry resulting to excessive supply of commodities. In a market where entry barriers are limited the price of commodities is determined by the market forces since no immobile has control over the market. overweening supply that is created results to low prices of goods and service offered. In response the price the price goes down due to competition from other warm. As a result, the profit that firms were devising initially decreases due.\r\nGraphical illustration\r\n1627833top00\r\nQuestion 7\r\n Oligopolistic market structures is a type of market where by small number of larger firms control the market jointly. The firms trade in well-nigh mistakable goods. Oligopolistic firms do not engage in price competetion (Vives, 2001).Basing our argument on the granular theory; where th e actions one firm depend on those of other firms, it is evident that when for instance one firm lowers its price compared to other firms, customers will be attracted by the lower prices resulting to other firms qualification economical loss in their operation. In response to this the other will lower their price slighted below the initial firm eventually attracting the customers. The other firms in the market will make loss and eventually respond by making their prices a good deal lower compared to other firms. This do continues until the firms sell at economically a low price that is illustrated by kinked curves (Vives, 2001).There to remain competitive and make profit do not engage in price competition.\r\nAlternatives to price conclusion\r\n Oligopolistic firms compete by employ alternative modes such as advertisement, product note and barrier to entry in the market. Oligopolistic firms start out a vigorous advertisement of their products both in home(a) and inter national levels. Advertisement is make to make potential customers aware(p) of the existence of the product in the market and the good qualities associated with such good and services (Taylor & Weerapana, 2012). Advertisement is carried out by mass media and product promotion. In addition oligopolistic firms constantly strike out their products in terms of prime(prenominal) and always struggle to come up with reinvigorated products stick out that outshine those of competitors. In the saucy-fashioned era product differentiation has been enhanced by of all time growing technology and innovation. Since oligopolistic firms compete in almost similar goods and services coming up with new products with good qualities gives a firm advantage over its market rivals. For instance straits manufacturing firms absorb constantly developed phone with new applications to remain competitive.\r\n Furthermore, the firms create market entry barriers to new firms, a strategy that vo uchs that the alive assign of market. The common market barriers include the patent rights, measurable government franchises and the existing economies of scale. These barriers ensure that the market is not make full by many firms that in the long run may reduce the existing firms’ share of the market control.\r\nReferences\r\nDwivedi, D. N. (2012). Microeconomics. New Delhi, India: Pearson genteelness/Dorling Kindersley.\r\nKemp, G. (2013). War with Iran: Political, military, and economic consequences. Lanham, doctor: Rowman & Littlefield Publishers\r\nTaylor, J. B., & Weerapana, A. (2012). Principles of microeconomics. Mason, OH: South-Western Cengage study\r\nVives, X. (2001). Oligopoly pricing: Old ideas and new tools. Cambridge, Mass. [u.a.: MIT Press\r\nSource memorial\r\n'