Essays on Impact of Tax on the Demand and Supply of Beef Assignment

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The paper "Impact of Tax on the Demand and Supply of Beef" is an outstanding example of a micro and macroeconomic assignment. Technological progress in natural gas extraction methods will increase production efficiency and this would cause the supply curve to shift to the right. However, changing technology will not cause a shift in the demand curves but there will be a movement along the demand curve since the price of gas will decrease due to high supply (Richard & Harbury, 2004). Therefore, a shift in the supply curve and a movement along the demand curve will have an impact on the market equilibrium price and quantity of natural gas.

The diagrams below show the effect of technological progress in natural gas extraction methods on the market equilibrium price and quantity of natural gas From the diagram, technological progress will cause the cost of gas production to fall and thus more will be produced creating a surplus which will increase the equilibrium quantity from Q to Q1 but the equilibrium price will not change. Technological progress will create a surplus in the market and this will cause a movement along the demand curve.

A downward movement in the demand curve will lower the price equilibrium from P1 to P2 and increase the quantity equilibrium from Q1 to Q2. Therefore, the market equilibrium will move from A to B. An increase occurs in the use of motor vehicles powered by natural gas. An increase in the use of motor vehicles powered by natural gas will increase demand for natural gas resulting in a shift in the demand curve and a movement along the supply curve.

This will have an impact on the market equilibrium price and quantity of natural gas as shown below From the diagram, an increase in the use of motor vehicles powered by natural gas will cause the natural gas demand curve will shift the right due to the increased demand. This will increase quantity equilibrium from Q to Q1 but the price equilibrium will not change. Due to the increased demand for natural gas as a result of an increase in the use of motor vehicles powered by natural gas, there will be an upward movement along the supply curve of the natural gas as shown in the diagram above.

References

Richard & Harbury (2004) First Principles of Economics 2nd Edition, Oxford University press: New York, United States

Winters A, (2009) International Economics 4th Edition, Oxford University press: New York, United States

Boyes W & Melvin M (2008), Microeconomics: South-Western Cengage learning, USA

Fall (2010) Principles of Microeconomics, Chapter 7: Taxes. Retrieved on 22nd December 2013 from http://www2.econ.iastate.edu/classes/econ101/herriges/Lectures10/Chapter%207H-%20Taxes.pdf

Lind, H. & R Granqvist (2010) A Note on the Concept of Excess Burden Economic Analysis and Policy 40:63-73

Riley G (2012) Perfect Competition - Economics of Competitive Markets, Retrieved on 21st December 2013 from http://tutor2u.net/economics/revision-notes/a2-micro-perfect-competition.html

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