### Supply and demand

Assignment Help Finance Basics
##### Reference no: EM13281568

1 Supply and Demand. The economic times in which we live are fascinating for a number of reasons. We have recently seen a recession, heard talk of a "recovery", and lately seen gasoline prices change. Using what you know about a supply and demand scenario give some causal factors impacting the gasoline market as of late (two would be enough). Tell whether each impacts the supply side of the market or the demand side of the market and whether it causes a rise or a fall in the price of gasoline. Your answer can use either "long term" or "short term" impacts on the market.
2 Efficiency and Market Outcomes. Explain in your own words what an economist means when she refers to a market outcome as being efficient. Following that explain an example of an externality, describing if the externality is positive or negative and if it impacts the supply or the demand side of the market. Explain how the market outcome compares to the socially optimal (or efficient) outcome. Also, explain a solution to the externality that a policy maker could take.
3 Splitting up Demand. We frequently see market demand and supply curves as depicting an equilibrium in a market place. Think for a moment if I were to say that the demand for smart phones has increased tremendously over the past two years as the available technology has increased usability and desirability. Nobody would object to that statement and we would think about all the smart phones we see in the marketplace. However, if we all began shopping for new smartphones our first step would be to determine which smart phone to buy. It must be the case then that somehow market demand is "split" into demand for particular models of cell phones. Think about this example and begin to generalize and create an explanation - in layman's terms - about how market demand may be split, not just in the smart phone market but in other "aggregated markets" in general.

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