Week 3 Discussion - Micro Economics- Due by tomorrow, Wed. by 5pm CST

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Week 3 Discussion

 

Supply and Demand in a Regulated Market

Imagine that politicians have decided that fuel prices are excessive for U.S. drivers and have passed a law that grants the power to regulate retail fuel prices to the U.S. Department of Energy.

Post by Day 3 a 250- to 300-word statement that addresses the following:

  • How might supply and demand for fuel be affected by fuel prices that are set by the Department of Energy instead of by a free market?
  • Will the amounts of fuel demanded by consumers be met by the quantities supplied by a regulated market?
  • Does a regulated market result in better economic efficiency in the production and consumption than a free market?
  • Be sure to support your position with references to the principles discussed in your assigned reading.

Read a selection of your colleagues' postings.

Respond by Day 6 to two or more of your colleagues' postings in one or more of the following ways:

  • Ask a probing question.
  • Share an insight from having read your colleague’s posting.
  • Offer and support an opinion.
  • Make a suggestion.
  • Expand on your colleague’s posting.

Return to this Discussion in a few days to read the responses to your initial posting. Note what you learned and the insights you gained as a result of the comments your colleagues made.

Be sure to support your work with specific citations from the Learning Resources and any additional sources.

 

 

Required Resources

Readings
  • Frank, R. H., & Bernanke, B. S. (2010). Principles of microeconomics, brief edition (2nd ed.). New York, NY:McGraw-Hill/Irwin.
    • Chapter 3, “Supply and Demand” (pp. 61–94)

      Chapter 3 introduces the supply-and-demand model of a market. The chapter also compares central planning and the market as alternative methods of allocating resources. In addition, the chapter explains how to use the supply-and-demand model to explain changes in prices and quantities.

      Focus on the examples provided in the demand-curve and supply-curve sections. In addition, focus on the shifts in these curves.
    • Chapter 4, “Demand and Elasticity” (pp. 62–82)

      Chapter 4 introduces the concept of elasticity and explains how variations in prices, incomes, and other economic factors affect the demand and supply of products. The chapter also describes the concept of the price elasticity of demand. This concept is used to explain changes in the values of the prices and quantities of products.

      Focus on the graphic interpretation of price elasticity, elasticity, and total expenditure, and review the table showing the price elasticity of demand for different products.
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