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Economics comment

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Introduction

Economics Coursework Economics Coursework SL Afonso Sim�es 12 CLC Word count: 725 words Source: "Time" The article that I chose refers to the impact of the natural disasters in Japan to the price in oil. It mainly talks about the descent of the price of oil, as the world's third largest economy is crippled, reducing a lot of demand for oil. Demand is the quantity of a good or service that consumers are willing and able to purchase at a given price at a given time. We can perceive this from a supply and demand graph. Supply is the willingness and ability of producers to produce a quantity of a good or service at a given price in a given time. As the demand is crippled, the demand line in supply and demand graph shifts to the left. ...read more.

Middle

Nuclear power is the second choice for power these days, so if demand falls for this technology, demand will have to rise in another, such as oil. This will pull back the demand line again for oil potentially stabilizing it. Market equilibrium after accident After mediations from nuclear power plant problems The demand increases, raising the prices again for oil and even more as people will want more diesel oil. Later on the article, it talks about how the governments invested in oil, and supplied more barrels, to have an attempt at decreasing the price of oil. This is buffer stocks system. This is a situation where a government intervenes in a market to stabilize prices. This often happens in unstable activities. This process isn't a very useful one, as it is expensive to store materials and may be seen as in-human to not supply all oil at this time. ...read more.

Conclusion

For the last comment, we can comment on the PED, Price Elasticity of Demand. It's a measure of how much the quantity demanded of a product changes when there is a change in the price of the product. It is calculated by using the following equation: PED = % change in quantity demanded for the product / % change in price of the product. In this specific example, oil, the PED is very inelastic, as it is extremely unless than 1. The PED works otherwise in this example, as price goes down, the responsive is strong, as people will be relieved around the world. PED is very useful to know, as you know what the response will be to changes in prices. This changes everything, even for governments, as then they can know when to act in a buffer stocks system. ?? ?? ?? ?? Economics Coursework Afonso Miguel Sim�es 12CLC ...read more.

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