Economics Assignment Essay Example | Topics and Well Written Essays - 1000 words - 1

Economics Assignment - Essay eventSuch a development is in all likelihood to hike the impairment of oil color given that the demand for oil remains fixed. The pressure upon the equipment casualty level is heightened given the fact the unavailability of suitable substitutes of the product.The key hurt to be addressed in the present paper are demand and supply schedules, balance wheel points and substitutes. affect and supply schedules constitute of the market forces prevalent in nation. While the former is the locus of various price levels and the corresponding entirety of aggregate demand made by the consumers, the last mentioned is the reflection of the aggregate amount that the suppliers are going to provide in the market at any given level of price (Mankiw, 2008, p. 65).Equilibrium points are determined at the intersection of demand and supply schedules these are the points at which aggregate demand and aggregate supply match with one some other. An economy is expecte d to operate at the equilibrium point at its optimum (Frank & Bernanke, 2006, p. 66).Lastly, substitutes imply the goods which both consumers and suppliers are likely to replace for any peculiar(prenominal) commodity. If two goods are perfect substitutes, any discrepancy in the market forces of one is reflected in that of the other. For instance, a shortage in the supply of one leading to a hike in its equilibrium price level forget be mirrored through a hike in the demand for another good that is a perfect substitute, as more and more people rush to avail the latter commodity instead of the first. However, if two goods are imperfect substitutes, a discrepancy originating in one will not be reflected much in that of the other (Poterba, 1999, p. 31).The present problem is that of a situation that is likely to arise due to a crunch in the availability of oil. Since oil could be used for bigeminal purposes and does not have many substitutes to replace it perfectly, the demand for oi l could be regarded to be quite inflexible in nature (represented by the red curve). On