Economic Course Work Essay

The commercialise pick up (red line) for vegetable inunct colour is steeply inelastic, and a huge change in outlay only has a small squeeze on need for oil. In essence, you testament not drive in two ways as fast because oil is cheaper, nor cannister you easily switch from victimisation one type of fuel to another(petrol to diesel) just because its monetary value has changed to be cheaper. The add of oil is relatively inelastic. This is because investment in the production facilities runs to an increase in egress, but the greet of pumping out the oil is relatively the same (Hillier, 2005). It get out cost an oil production facility roughly the same essence to produce at half or full capacity.Maintenance and repairs ordain only be done if the expense of oil is high. In essence, we can say that a small change in the admit and proviso curve causes a larger change in the clearing scathe of oil in Russia. As the cost if oil goes up, the Bus f ares will increase as transporters will try to recover the remaining cost from the passenger, consequently reducing the consume for buses. This in turn will lead to passengers demanding more than of the train services which are not affected by the rise in oil price, thus the shift in the demand curve to the right. Indicating a demand for trains.During earth the demand for oil was low, thus the downward shift of the demand curve from D1 to D2. This was a result of consumers flavor for alternative sources of fuel energy, since the price for oil was high. Also during the recess, due to the recession, the price of oil went up, thus the upward shift of the supply curve from S1 to S2. The high prices led to more production, thus more supply to capitalize on the prevailing high market prices of oil. iv) Use a demand and supply diagram to show what happens to oil prices when the UK adopts energy efficiency measures and invests in hustle and solar energy There will be less demand for oil from the British as they will look for alternative heart for energy, thus the downward shift of the demand curve from D1 to D2. Thus provided organic evolution in alternative energy resources means that in that respect is dissipate of technology thus the equivalent point shifts to the left. v) What happens to oil prices if high stinting growth continues in India and mainland China. India and china are following the traditional frugal growth path which requires huge oil production and use. Since the national resources are limited, large outdo of imports are necessary.Larger demands, higher price, higher expectancy to prices attracts speculators to buy more of the oil, which creates the bubble, higher prices of oil due to increased demand (Copeland et al, 2005). 2. Use demand and supply analysis consider what factors on the demand side and which on the supply side will influence oil prices over the next few years? (50 marks) Prospects in the realness economy. The world populations is increasing daily, signaling an increase in the demand for oil to suffer some of the basic life energy needs . It is estimated that the population of India and China will grow by 8.4% and 10% respectively. This alone is a free market (demand) for oil (Market avenue, 2008). Thus this will affect the price of oil, as the demand will increase, thus a rise in the price of oil. Technological development. The world oil supply will cleanse with new technologies being propagated everyday to ensure more but cost-effective production and distribution of oil to the markets. This will lead to more efficacious and environmentally friendly oil facilities that will increase the supply of oil at a global level (Market Avenue, 2008).As a result, the price of oil will go up in proportion to the investments purge in place to do the renovations and maintenances of the oil production facilities. Global economic political situation as with Iran nuclear issue, in as ofttimes as Iran has high reserves oil an d gas, it is has a nuclear development programme that is looking at using nuclear technology as an alternative to oil and gas. This has prompted political debates impasse, and sanctions as regards the future of energy resources in the world.Reports by Market Avenue (2008) shows that this affects the price of oil in the sentience that Iran has the second largest oil reservoir, next to Saudi Arabia, and thus devote a greater rig over how their international relations plays out with the world super powers and the OPEC to regulate the supply and price of oil. According to Biswajit et al (2007), alternatives to oil, there are increasing alternatives to oil as a source of energy. some other alternatives like, solar, propane, nuclear energy, bio diesel, hydrogen, battery and ethanol. All these are alternatives to oil that accept been proven to work.Even though their use is still small scale compared to oil, they are emerging as good alternatives oil use. This affects the future of oil use globally as they tend to be more environmentally friendly and cheaper than oil. 3. Describe the structure of the world motor political machine attention (25 marks) The first producer of a petrol engine driven car was Karl Benz, 1885 Mannheim Germany. everywhere the years many inventions and different models of cars have come. These include scratch names such as Toyota, Hyundai, Range Rovers, Mercedes Benz, Nissan just to mention a few.Globally there are many producers of cars. For ease of reference they have been ranked by country. In the top ten we have China, Japan, USA, Germany, to the south Korea, Brazil, India, Spain, France, and Mexico respectively. The top ten brand names include Toyota, General Motors, Volkswagen, Ford, Hyundai, PSA, Honda, Nissan, society and Suzuki. This is relation to the number if volumes of vehicles the produced in 2009. Depending on the regions, various cars manufacturers have a specific share in the markets in which they operate in.Example i s that Thailand is today, already the second largest globally, pick-up truck market after the U. S. and is ASEANs largest automotive market and assembler. In her report, Global Automobile Industry Changing with Times , Chithra Gopal R. S. , M. Sc (Agri), says that in Thailand today all leading Japanese car producers as well as BMW, Mercedes Benz, General Motors, Ford, Volvo and Peugeot assemble cars along with their legions of suppliers. The country has extend the main production base for auto- mobile exports in South eastside Asia.One of the biggest foreign producers located in Thailand is Toyota with a production totaling more than 300,000 vehicles a year and the number is having an upward trend. General Motors (GM), although a untold smaller player in Thailand than Toyota, is also increasing production. The other big auto companies located in Thailand are Isuzu, Mitsubishi, Nissan, Auto Alliance, Honda etc. In recent years, BMW and Daimler Chrysler (Mercedes-Benz) have also in creased their investments to gain complete control on local manufacturing and marketing operations, indicating that the auto mobile industry in Thailand has the structure of perfect competition(Biswajit et al. 2007). References Biswajit, N. , Saikat, B. &Rittwik, C. (2007). Asia-Pacific Research and Training entanglement on Trade Working Paper Series, No. 37, July 2007. Retrieved on 21 August, 2010. From http//www. unescap. org/tid/artnet/pub/wp3707. pdf. Case, K. & Fair, R. (1999). Principles of Economics, 5th Ed. New York Prentice-Hall. Copeland, A. , Wendy, D. & Hall, G. (2005). Prices, Production and Inventories, Over The Automotive Model Year, Working Paper 11257, NBER Hillier, B. (2005).The Macroeconomic Debate. Oxford Blackwell, pp. 7-85. Market Avenue (2008). Major Factors Affecting World Oil Market in 2008. Retrieved on 21 August, 2010. From (http//www. marketavenue. cn/upload/articles/ARTICLES_1422. htm Parkin, M. & Bade, R. (1982). Modern Macroeconomics. Indi ana University press Philip, A & Fischer, S. 1980. Rational Expectations and Economic Policy. Chicago University of Chicago Press http//www. tradingtoday. com/26-oil-supply-demand, http//www. eco-action. org/dt/oilfut. html).