Assignment- Micro Economics
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 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.
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.
o 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.
o 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.
Media
• Kahn Academy. (2014g). Law of demand [Video file]. Retrieved fromhttps://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demand-equilibrium/demand-curve-tutorial/v/law-of-demand
Note: The approximate length of this media piece is 8 minutes.
• Kahn Academy. (2014h). Law of supply [Video file]. Retrieved fromhttps://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demand-equilibrium/supply-curve-tutorial/v/law-of-supply
Note: The approximate length of this media piece is 8 minutes.
• Kahn Academy. (2014a). Breakdown of gas prices [Video file]. Retrieved fromhttps://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demand-equilibrium/oil-prices-tutorial/v/breakdown-of-gas-prices
Note: The approximate length of this media piece is 12 minutes 30 seconds.
• Kahn Academy. (2014r). Short-run oil prices [Video file]. Retrieved fromhttps://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demand-equilibrium/oil-prices-tutorial/v/short-run-oil-prices
Note: The approximate length of this media piece is 11 minutes.
Optional Resources
• Frank, R. H., & Bernanke, B. S. (2011). Principles of microeconomics, brief edition (2nd ed.) [Supplemental material]. Retrieved from https://highered.mheducation.com/sites/0077316770/student_view0/index.html