Essay on "Economics for Business"
Essay 5 pages (1270 words) Sources: 1
[EXCERPT] . . . .
economic impact of persistent high oil prices. With extraction flatlined, some see this as evidence of peak oil. With demand growing, especially from emerging economies, the period of peak oil is characterized by increasing demand and decreasing supply. This will drive prices higher. There are a number of impacts on the market for oil that will occur as the result of this and impacts on the market for other fuels as well. This paper will assume a situation in which the long-run supply of oil is diminishing and the long-run demand is initially increasing, leading to higher prices.The essay will begin with a set of key definitions. This will be followed by a description of some of the theories that are relevant to this problem. Examples of the impact will follow, illustrating how the increasing price of oil will impact on the market for both oil and its closest substitutes. Finally, conclusions will be drawn explaining the implication of these findings.
Definitions
The most important concept to understand is the idea of peak oil. We know that there is a finite amount of oil on this planet, and as a result we know that at some point the production of oil will peak. The peak year for the discovery of new oil was in the 1960s, and world consumption that exceeded new discoveries was in 1981 (Campbell, 2011). Many believe that peak oil has already occurred. The implications of this are that we are still increasing demand at a point in time when we have peaked our extraction -- supplies will begin to diminish from the point of peak oil forward.
Another concept that is important is that of alterative fuels. In economics, alternatives are
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Another key concept is that of price elasticity of demand. This concept reflects the idea that demand for a good varies depending on its price. However, the degree to which price and demand are related is different for different goods. It is also different for the same good over different points in time. Goods with high price elasticity of demand will see demand change sharply in relation to the price; goods with low elasticity will not see much change in demand relative to the change in price. Related to this idea is the concept of cross-price elasticity of demand. This is the change in demand for one good (we'll call it solar power) when the price of another good changes (we'll call that one oil).
Description of the Issue
The first question is what will happen to demand for oil if prices begin to rise strongly and permanently. To understand what will happen, we must know the price elasticity of demand for oil. According to Anderson et al. (1997) the short-term price elasticity of demand for oil is 0.2. This estimate is from 1997 and the trend was downward, meaning that elasticity is probably even lower today. What this means is that in the short run, demand will not change much given a change in the price of oil. So when oil prices rise, demand only changes a little bit. In this case, it appears that only a small portion of the demand for oil is discretionary, and a price increase would therefore only remove that discretionary demand from the market. Basically what this means is that people… READ MORE
Quoted Instructions for "Economics for Business" Assignment:
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Oil prices are high and constantly changing, but alternative fuels are not an evident choice for motorists. Assume that oil begins to run out and that extraction becomes more expensive. Trace through the effects of this on the market for oil and the market for other fuels.
Economics for Business Essays (Plan)
ALL STUDENTS need to be aware of the following requirements towards an essay in economics:
For each essay undertake the following:
As a general piece of advice, always make sure that you DIRECTLY answer the set question and do not just write out of lecture notes. Hence, show that you understand the concepts and theory and apply your knowledge and research to the question!
Essay Structure
Structure your answer on the basis of the key components below.
Brief introduction announcing what your essay will address and why it is relevant, including a short exposition of the elements of your essay (see as well below).
Define: Provide definitions to the key terms and concepts.
Describe: You must demonstrate your knowledge by outlining the theory that is relevant to the question.
Diagram: Normally economics questions will require one or more diagrams. Draw these clearly and correctly, in a reasonable size, including all relevant labels.
Explain diagram: Say exactly what the diagram shows and the implications it has.
Examples: Tie your answer to the real world. Show how the theory or model is relevant by making links to and discussing examples.
Conclusion: Finally provide a conclusion summing up what you have shown in your essay and the implications of your findings.
And of course, coursework should include a References list at the end, including ALL sources from which you have drawn in your arguments within the essay.
For guidance on How to Reference, please consult the university study guides available at: https://intranet.uea.ac.uk/services/students/let_service/study_guides/Referencing.
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How to Reference "Economics for Business" Essay in a Bibliography
“Economics for Business.” A1-TermPaper.com, 2011, https://www.a1-termpaper.com/topics/essay/economic-impact-persistent-high/4631375. Accessed 5 Oct 2024.
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