02 Jun Question MBAA 523 Problem Set 2 The popular and financial press regularly report on e
Question
MBAA 523
Problem Set 2
The popular and financial press regularly report on economic events, but the description is usually quite different from the theoretical model provided in a microeconomics textbook. This problem set provides an opportunity to practice supply and demand analysis using excerpts from articles published in the Wall Street Journal.
For each of the following 12 economic circumstances, show the shift of supply and/or demand curves; use an arrow to show the shift in the curves, the change in price and the quantity demanded. To insert lines and arrows in MS Word, click on “Insert” on the upper menu bar. Next, click the drop down menu under “Shapes.” Select the shape you’d wish to insert, then use the mouse to insert the line or arrow into the graph.
Below the graphical analysis, write a short explanation explaining your analysis. Here’s an example of the graphical analysis:
This example shows an increase in the demand curve, perhaps as a result of an increase in income. The shift in the demand curve leads to a higher price and quantity demanded. For each problem, explain why the curve(s) shifted.
Problem 1 – Conflict fears drive up crude prices.
A military conflict forces the shut-down of major crude oil pipeline. World oil prices soared to an 18 month high. Show the effects in the crude oil market.
Explanation:
Problem 2 – Egypt’s Gaza Crackdown Hammers Economy
An aggressive crackdown by Egypt’s interim government on smuggling tunnels between Egypt and the Gaza Strip is crushing the Palestinian enclave’s economy, sparking concerns it could fuel a militant backlash. To get around the blockade, Gazans smuggle goods, and the tunnels’ closure has sent prices soaring in the past three weeks. Many Gazans now buy the Israel-shipped fuel for seven shekels ($2) a liter — more than twice as much as that smuggled from Egypt. The cost of cement, another major smuggled item, has reached $1,500 a ton from $1,000, said Ahmad Abdul-Rahman, a merchant. Show the effects in the Gaza market for goods and services.
Explanation:
Problem 3 – Dutch Economy Faces Stagnation
The Albert Cuyp market here, famous for its offerings of cheap clothing and exotic foods, is one of the busiest in the Netherlands. But while it still attracts plenty of shoppers, customers are increasingly wary of spending their money there, said Nicolas Steur, a 50-year-old fishmonger. Revenue at his stall, where he sells fresh haddock, raw herring and other seafood, has fallen by 20% compared with four years ago. “We still have about the same amount of customers,” Mr. Steur said. “But they spend less money. People are cutting down on their expenses.” Show the effects in the Albert Cuyp market.
Explanation:
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