Question 1. (Demand and Supply) How do you think each of the following affected the world price of oil? (Use demand and supply analysis.)
a. Tax credits were offered for expenditures on home insulation.
b. The Alaskan oil pipeline was completed.
c. The ceiling on the price of oil was removed.
d. Oil was discovered in the North Sea.
e. Sport utility vehicles and minivans became popular.
f. The use of nuclear power declined.
Question 2. (Demand and Supply) What happens to the equilibrium price and quantity of ice cream in response to each of the following? Explain your answers.
a. The price of dairy cow fodder increases.
b. The price of beef decreases.
c. Concerns arise about fat content of ice cream. Simultaneously, the price of sugar (used to produce ice cream) increases.
Question 3. (Equilibrium) Consider the following graph in which demand and supply are initially D and S, respectively. What are the equilibrium price and quantity? Id demand increases to D’, what are the new equilibrium price and quantity? What happens if the government does not allow the price to change when demand increases?
