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 fag costs leads to a decrease in the sound’s supply. As supply falls the equipment casualty of the good rises stellar(a) to a decrease in total accepted. It is feasible that juicy incomes of fast food workers (assuming that these workers benefit from the higher minimum wage) cogency lead to an append in the demand. Obtaining such(prenominal) an outcome requires that these workers also put through fast food. [pic] 2. Earlier this calendar month British fossil oil corporation announced the discovery of a major pertly oil field (estimated reserves among 3 to 15 jillion 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 away not have for 2-4 years go away have no effect on current demand. Granted, expected legal injurys will be displace, but consumers argon not going to tump over up driving for 2 years to take emolument of the price decrease. The effect of lower prices is more likely to be seen on the supply side. oil colour companies that have confine reserves might choose to development supply in the current time period if they expect future prices to fall. The append 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 that goods price. If demand is inelastic consumers are relatively in responsive 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 i s widely public opinion to be inelastic. ! Given this, what can you discern about a regime’s motives when it...If you want to get a climb essay, swan it on our website: OrderCustomPaper.com

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