Assume good rainfall has resulted in a bumper harvest of wheat. Using demand and supply analysis and graphs, explain how this will impact on the equilibrium price and quantity of:
a) Wheat flour.
b) Millet, assuming it is a substitute for wheat.
2 + 2 = 4 MARKS
Increase in oil prices over the last decade, has led to an increase in world oil production as both the US and Canada began extracting oil from sources that were once considered too expensive, such as shale and oil sands. The increase in world oil production in recent times has also been accompanied by slower economic growth in Asia and Europe. Explain using demand and supply analysis the impact the above factors are having on the equilibrium price and quantity of oil. 4 MARKS
Exercise has great positive externality on society in terms of health, economic and social cost of preventable diseases. Explain, with the use of demand and supply diagrams, the impact on equilibrium price and quantity of membership to health clubs from both an effective advertising campaign by the National Health Council and the introduction of tax rebates by the government. . 4 MARKS
If a 10 percent increase in price of a product results in a 5 percent decrease in the quantity demanded, calculate and interpret the price elasticity of demand. In your answer, also explain the impact on total revenue. 3 MARKS
Jesse Singh (May 2015).