ASSIGNMENT Supply Demand Analysis

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WrgBarGI

Economics

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This is the assignment I have this week and not able to complete it in time.

Please help me out as to not fail the class.

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WRITTEN ASSIGNMENT 2-1 Supply & Demand Analysis NAME: _________________________________ 2-1 Consider the diagram below which depicts the market for gasoline in California. Answer the following questions or accomplish the following instructions: 1) Label the price axis, the quantity axis, the demand curve, the supply curve, and the equilibrium in the market. 2) Would there be a surplus or a shortage at a price of $6.00? Draw in the price line at $6.00. What would be the quantity of gasoline of the surplus or the shortage in the market? (Approximate if necessary.) 3) Would there be a surplus or a shortage at a price of $2.00? Draw in the price line at $2.00. What would be the quantity of gasoline of the surplus or the shortage in the market? (Approximate if necessary.) 4) Would a price ceiling on gasoline lead to a surplus or shortage? Choose either the $6.00 price line or the $2.00 price line as a price ceiling. Who would benefit and who would lose with a price ceiling on gasoline? Market for Gasoline 12.00 10.00 8.00 6.00 4.00 2.00 0.00 0 50 100 150 200 250 WRITTEN ASSIGNMENT 2-1 Supply & Demand Analysis (Continued) 2-2 Explain what would happen to either the supply curve, the demand curve, the price of gasoline and the quantity of gasoline traded at equilibrium if the following scenarios occurred. Provide a simple sketch of the appropriate shift in the appropriate curve. a) If President Trump’s reduction in taxes (passed in December 2017), caused disposable income to rise, what would happen in the market for gasoline? b) If President Clinton (hypothetically speaking, of course) had required 30% of all vehicles to be electric in 2018, what would happen in the market for gasoline? c) If President Sanders (how did he get here into our hypotheticals?) increased pollution controls on the production of gasoline, what would happen in the market for gasoline? d) If President Johnson (now “who is he?” hypothetically) relaxed the rules on “fracking” to extract oil from the ground, leading to higher efficiencies and lower costs in the production of oil, what would happen in the market for gasoline? e) If President Stein (now “who is she?” hypothetically) ended ethanol subsidies and the requirement to mix ethanol with gasoline, what would happen in the market for gasoline?
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Running head: SUPPLY DEMAND ANALYSIS

Supply Demand Analysis
Name:
Institution:

1

SUPPLY DEMAND ANALYSIS

2

Labelling the price axis, the quantity axis, the demand curve, the supply curve, and the

equilibrium in the market.

Note: The point of intersection between the demand and supply represents the equilibrium in the
market.
Would there be a surplus or a shortage at a price of $6.00?
At a price of $6.00, there will be a surplus in the quantity of gasoline, it will be approximately
140.

SUPPLY DEMAND ANALYSIS

3

Would there be a surplus or a shortage at a price of $2.00?
At a price of $2.00, there will be a shortage in the quantity of gasoline, it will be approximately
75.
Would a price ceiling on gasoline lead to a surplus or shortage?
A price ceiling exists when a government puts a restrictive limit on how high the value of
a commodity can be. For a cap to become effective, it must be set below the market equilibrium.
Price ceilings are problematic when they are set below ...


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