Module 2 Assignment By using 2-dimension graphs (in MS WORD) for PRICE and QUANTITY, demonstrate the effect that each of the fol
lowing will have on the demand for gasoline in a competitive market? State what happens to demand. Explain your reasoning in each case and relate it to a demand determinant. If you are not able to use MS-WORD, just draw on a piece of paper, take a picture, and submit it as a PDF file. If you cannot use MS Word tools, just use your pen and paper and upload images or screenshots. (a) an increase in the number of cars (25 points) (b) the economy moves into a recession (25 points) (c) an increase in the price of car insurance, taxes, maintenance (25 points) (d) consumer expectations of substantial price increases in gasoline (25 points) Total == 100 points.
1 answer:
Answer: The answer is provided below
Explanation:
a. An increase in the number of cars will lead to an increase in demand as more people will demand for gasoline. This will lead to a rightward shift of the demand curve from D1 to D2. The increase in demand will also lead to the rise in price of gasoline from P1 to P2.
b. When the economy moves into a recession, people will purchase less cars because of the recession, as the income level of the consumers will have fallen. Due to the decrease in the number of cars, the demand for gasoline also reduces. This is denoted by the leftward shift in the demand curve in the attached diagram from D1 to D2.
c. The increase in the price of car insurance, taxes, maintenance will also lead to a reduction in the demand for cars which will in turn, reduce the demand for gasoline. Thereby the demand curve shifts from from D1 to D2 leftward.
d. The expectations of substantial increase in the price of gasoline, will lead to a higher demand for gasoline in the present period because due to the expectation of a higher price, the consumers will go and buy more gasoline and keep for future use. As the demand for gasoline rises, this will lead to the demand curve for gasoline to shift rightward and also the price will increase from P1 to P2.
The diagram has also been attached.
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<h2> Whispering Winds Corp.</h2>Statement of Cash Flows (Indirect Method) 2017
Cash flow from operating activities:
net income $161,100
Adjustments to reconcile net income:
+ depreciation expense $40,160
+ loss on sale of equipment $2,020
Change in current assets:
- increase in accounts receivable ($40,050)
- increase in inventory ($44,310)
+ increase in prepaid expenses $1,980
Change in current liabilities:
+ increase in accounts payable $2,580
- decrease in accrued exp. payable ($10,070)
Net cash provided by operating activities $113,410
Cash flow from investing activities:
purchase of new equipment ($164,450)
sale of old equipment $33,650
Net cash provided by investing activities ($130,800)
Cash flow from financing activities:
Proceeds from issue of new stocks $171,150
- redemption of bonds ($49,180)
- dividends paid ($85,680)
Net cash provided by financing activities $36,290
<u>Net increase in cash $18,900</u>
