Microeconomics

Tiffany Townsend

Microeconomics ES2550

Analysis 2.2

March 25, 2016

Events

1. The price of oil increases because OPEC reduces oil production.

When the price of oil increases because OPEC reduce oil production there will be a decrease in the quantity supplied. Due to which price of oil increases assuming demand to be constant.

2. The tax on gasoline consumption increases.

When the tax on gasoline consumption increases it is an example of pay-as-you-get tax. So when the tax increases its demand will go down, supply assuming to be same. Hence demand decreases.

3. Firms start producing more fuel efficient vehicles and produce fewer vehicles that use fuel inefficiently.

When Firms start producing more fuel efficient vehicles and produce fewer vehicles that use fuel inefficiently the demand of the fuel increases, its supply being same as now more people desire vehicles.

4. Summer arrives and more people choose to take vacations.

When summer arrives and more people choose to take vacations then the supply of labor in the market decrease, demand being same this would produce a causes rising force on the prices.

5. The price of gasoline increases.

When the price of gasoline increases people are demotivated to use it and its demand decreases.

6. The price of ethanol, a complement good, increases.

The price of ethanol increases due to less demand for gasoline its complement

7. There is a large oil spill in the Gulf of Mexico.

This event leads to increase in price due to decrease in supply

8. Incomes fall because a recession begins and gasoline is a normal good.

This event leads to decrease in demand for gasoline due to decrease in income.

9. Consumers desire more electric powered vehicles instead of gasoline powered vehicles.

Demand leads to increase in demand for electric and less demand for gasolines as a result reducing its prices.

10. A new production method allows for twice as much gasoline to be refined per day....