Gas Junkie - Gasoline Prices Questions

Question: Microeconomics Help!?

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Answer #1:

did you just copy and paste a take home test online? what a loser

Answer #2:

Here is the economics of Y!Answers. I get 2 points for answering a question. You have asked 5 complicated questions in one. My opportunity costs are I could answer 5 easier questions in the system and get 10 points with 5 chances at additional 10 points BA instead of 1 chance. Thus a significant opportunity cost means not many people will answer here.

But here is a start anyway. So a gas station can buy gas at $3.00 and sell it at $2,75 losing money on every sale. Guess what? No one bothers to run a gas station. You can assume some might be able to secure a price at less than the equilibrium wholesale price, but your model would still run with severe shortages. You need to draw a supply and demand curve and add in the price ceiling for this.

College. Assume college costs $15,000 a year $15,000 living expenses and you can earn $30,000 a year working. So with the opportunity costs, you are looking at $60,000 a year. You have a certain demand for college based on people with this $60,000 costs. So then tuition goes up 10 percent. You initial reaction is that's outrageous. But do you stop going to college? Probably not because as tuition is only 25% of your total costs, a 10 % increase in tuition is only 2,5% cost increase overall. Also consider if you have been going for 2 or 3 years and the price goes up 10%. You have spent $120,000 to $180,000 already. Are you going to drop out and have nothing to show for your investment based on $1,500 a year increase? So I would say demand for college is relatively price inelastic. You can change the price and it doesn't affect the number of students to the same degree.





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