The paper "Microeconomics - the Effect on the Market for Cars" is a great example of a finance and accounting assignment. Basically, opportunity cost is the cost of not choosing an alternative. Based on the 2 alternative choices below, the opportunity cost is alternative 2, buying the textbook and study guide for this unit. Alternative 1 Save expenses by not buying the textbook and study guide for this unit. Alternative 2 buying the textbook and study guide for this unit. 2. For each of the following, draw a diagram that illustrates the effect on the market for cars.
Indicate in each case the impact on equilibrium price and quantity (West 2003;5) a) The price of petrol, a complementary product, keeps rising http: //www. netmba. com/econ/micro/supply-demand/ The increase in the price of petrol causes a shift in the equilibrium price from D1 vs S intersection to Do vs S intersection. b) There is an increase in the price of compulsory car insurance The increase in the price of compulsory car insurance will cause a shift in the equilibrium price from the D1 vs S intersection to the Do vs S intersection. c) A technological innovation reduces the cost of production http: //www. netmba. com/econ/micro/supply-demand/ A technology innovation that reduces the cost of production causes a shift in the equilibrium price from Do vs S intersection to D1 vs S intersection. http: //www. netmba. com/econ/micro/supply-demand/ d) A local government imposes a green tax on car ownership (2 marks) http: //www. netmba. com/econ/micro/supply-demand/ Local government imposition of a green tax on car ownership causes the equilibrium price from D1 vs S intersection to Do vs S intersection (Samuelson, 1973;125). 3.
The supply of oil will never actually run out. Why? (1 mark) The supply of oil will never actually run out because there are alternative sources of energy.
Some environment-friendly cars will use solar panels (sun energy) to run their cars. Some electricity generating companies will use atomic energy to generate electricity. Other electric companies are shifting from fossil oil to waterfalls (hydroelectric power) to generate home and office electricity. The shift in fuel demand from oil to other sources will prevent the supply of oil from actually running out (Samuelson, 1973;25).
Yale, retrieved June 2, 2010, http://e360.yale.edu/content/feature.msp?id=2148
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