Managerial Economics Case Problem Solution Essay

1. Americans are known for their long-term love affair with their cars. But as gasoline prices soar and concern about the environment mounts, the standard of living by ordinary people on a daily basis also become difficult; the need to conserve gasoline has become increasingly clear. What would it take to reduce the overall demand for gasoline in the United States most especially as we see it now?

The following article is regarding what is most important to everyone around us regarding the pricing for gasoline at the pumps. This is a topic that concerns most people on this planet, why are the prices for gasoline so high and is it regarding the greed of oil producing companies to continue to keep rising the gasoline prices as high as possible. We will discuss the many reasons why these fluctuating pricing keeps occurring within our world market. We will use the retail gasoline pricing between the

First, the foremost issues at hand are currency and opportunity. Currency and the overwhelming desire for more are the pivotal driving factors in a gasoline and diesel industry. The government receives too much money from these industries to make the adjustments that are necessary. Unfortunately, the government does merely enough to get by. However, Americans need to analyze the opportunities at hand. In the text "Brief Principles of Macroeconomics," author Gregory Mankiw tells us that, " the opportunity cost of an item is what you give up to get that

12) Suppose that we force the production of one unit of product A. The new objective function value will be

Gas economy in today’s times has been one of the major issues that the U.S government has been trying to solve ever since the auto industry had a financial and economic effect in your economy. Now the government must intervene in this Keynesian economist mode of thought in order to get the economy into equilibrium of aggregated demand and short-run aggregated supply. During this time the expectations for vehicle purchases were at an all-time low due to the expectation of the consumer of not making enough wages to cover their financial need. In order to stimulate the economy the government had to promote more spending by creating supply and demand for more fuel-efficient vehicles, trying to keep fuel prices at descent price and

Suppose QT = 150 (8 – PT) and QL = 180 (5 – PL) and MC=1.2 for each market. Calculate the optimal PT and PL.

Although the United States isn’t the most expensive place to buy gasoline, American’s feel that their paying too much. American’s use over “25.9%” of the oil used around the world and produce less than half of the amount American’s consume. American’s consume more oil than the whole European Union put together making it very reliant on oil (Wieczorek). Right now, the average price per gallon of gasoline in American is $3.061(November 8, 2007). A month ago we were paying around

b. Using the parameters in (a), construct a graph showing how the amount required for the order would

Suppose the demand for home heating oil in Connecticut is given by Q = 20 – 2Phho + 0.5Png – TEMP, where

The variables in this analysis include the consumers with their demand for vehicles and their demand elasticity when it comes to both the cost of fuel and the cost of vehicles shaping their demand, the suppliers and their ability to navigate the legislation to maximize their investor returns, the oil producer’s ability to maintain

There are changes that can be made to make up for the increase in gasoline prices. Some are income effects, some substitution effects, and others still are a

The US consumed 142 billion gallons of gasoline in 2007 and the tax applied on it is 18. 4 cents on one gallon. All around the US, there are around 162,000 retail gasoline outlets. With the price of crude oil hovering around $100 a barrel, it is no wonder that concern is growing about the gas prices being so high. After all, modern economies are kept moving by this lifeblood. For instance, in the United States alone personal vehicles consume more than 140 billion gallons of diesel fuel and gasoline per year.However, there are several factors that contribute to the gas prices being so high. Given below are a few of them. Increasing Demand for Oil One of the main catalysts for the incessant rise in gas prices has been one of the most

the fuel prices are kept constant, the fuel adjusted real yield shows that the prices were falling more rapidly at 2.7% (1967-77) compared to 2.0% (1978-88). These figures proved that consumers were paying more in 1988 then what they would have paid with regulation in effect.

2. Implications for each of the computed elasticities for the business regarding short-term and long- term pricing strategies.

We the American people have seen rising oil and gasoline prices continuously over the last few decades. Each year is slightly higher than the last. However, we have seen a few instances where oil and gasoline prices have spiked rapidly enough to invoke the American public to stop spending or cut back. The first time in recent history was after the hurricanes Katrina and Rita in 2005. Then, in July 2008 we saw a massive jump to the current record high national average of $4.50 per gallon of gasoline. Oil at this time was over $115 per barrel of light sweet crude which is the oil that American’s use in their gasoline. Currently the US oil and gasoline prices continue to increase. In the last month gasoline alone has risen almost 17 cents a