Course Project Paper 1

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Course Project Paper 1

David J Marshall

Winter Term 2012

mr_marshalls@live.com

Exercise 1: Microeconomics Issues: Question # 1
There are two reasons gas prices must go up. The first is to get people into coal-powered cars. Coal-powered cars can only be driven around 40 miles before they must be plugged back into the grid for more coal power. If everyone moves to coal-powered cars, the drivers will be forced to live closer to cities (Erickson, 2011). According to my current reading, when you look at the term product differentiation in buying your gas, this term gives competitors the edge to host the cheapest gas (Chapter 10:253).
In the current week, the Shell gas pump went from \$3.65 to \$3.57 per gallon and the week before that the gas price during week 1 was \$3.47 expecting to rise to \$4 per gallon in Lexington, KY. During my travel to Indiana the gas prices average \$3.99 per gallon. In using the midpoints of price and quantity to compute the relevant percentage changes essentially gives us the average elasticity between point (a) and point (b) (Stone, Gerald. “Core Economics” Worth Publishers, 07/2011. p. 118). My equation below may show just exactly how these price may increase or decrease based on the elasticity formula:
Eᵈ = 200 / 400 ÷ 3.65 – 3.57 / (3.57 + 3.65) / 2 = 200 / 400 ÷ (- 0.08 / 5.3950) = .5 ÷ -0.0148 = [-33.72] = 33.72
I think for the most part of our gas prices has increase due to determinants of our increase in supply due to our disaster issues that has pushed for aide from the government and local business. The supplies needed to help restore some of the cities destroyed will cost the economy and in such increase supply and demand.

Chapter 5, Question 17
The demand for computer chips and potato chips are high during the nation’s market period. In reading an article in ebsco, “Which state

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