Why do consumers sometimes take a while to respond to price changes? -Consumers cannot find acceptable substitutes immediately.
2 answers:
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Answer:
(a) Please find attached, the required graph showing the equilibrium price at $50 per barrel
(b) There will be a shortage
(c) Please find attached, the graph showing change in demand due to increased supply from the new oil well
(d) When there is an increase in the price of gasoline operated automobiles, there would be a downward shift in demand while supply would remain constant, and the equilibrium price will decrease
(e) The combined effect will be a further reduction in the price per barrel
Explanation:
The equilibrium price
(a) Please find attached, the required graph
(b) As shown on the graph, in a competitive market, at a price of $40 per barrel, there will be a shortage in the market due to the amount of money available will be more than the total price of the number of barrel for sale, because the equilibrium price at which the amount of money available in the market is equal to the total price of the barrels supplied gives the amount of money people a willing and able to spend on a barrel
(c) If new oil is discovered, the number of barrels supplied will be more than the amount of money available to purchase a barrel and the equilibrium price will drop
(d) When there is an increase in the price of gasoline operated automobiles, there would be a downward shift in demand while supply would remain constant, and the equilibrium price will decrease
(e) If both oil is discovered and there is an increase in the price of as operated vehicles, the result will be a further reduction in the price of a barrel of oil
