Economic

Question 1

When the oil production is disrupted that will cause the production of petrol decreased. The number of sellers in oil production is decreased. Then, the supply of petrol was decreased caused a leftward shift of supply curve from S1 to S2.The equilibrium price of petrol P1 is increased to P2. The equilibrium quantity of petrol Q1 is decrease to Q2.The initial equilibrium E1 is move upward to a new equilibrium at E2.

Question 2

The tax imposed on petrol results in a large rise in the price of petrol .Substitute goods is a good that competes with another goods for consumer purchases. Complementary good is a good that is jointly consumed with another goods. Petrol and the low fuel efficient car are complementary goods. Low fuel efficient car and high fuel efficient car are substitute goods.

For the complementary goods , the relationship between a price change for one good and the demand for its complementary good is negative. When the price of petrol increased ,the demand of low fuel efficient cars decrease . In the low fuel efficient cars market , the demand of low fuel efficient cars decrease as the price of petrol is increased . The demand curve shift leftward from D0 to D1 .The price of low fuel efficient cars is decreased from P0 to P1 and the quantity of low fuel efficient cars is also decreased from Q0 to Q1. The initial equilibrium E0 is move to the new equilibrium E1.

For the substitute good, the relationship between a price change for one good and the demand for its substitute good is positif .When the price of the low fuel efficient car increased, the demand of high fuel efficient car is increase . In the high fuel efficient cars market, the demand of the high fuel efficient car is increased as use lesser petrol than low fuel efficient car per kilometer .The demand curve shift rightward from D0 to D1. The price of high fuel efficient cars is increased from P0 to P1 and the quantity of high fuel efficient cars is also increased from Q0 to Q1....