Economic Course Work Essay

The market implore (red line) for anoint is super inelastic, and a large change in value only has a small impact on pray for fossil crude color. In essence, you leave behind non drive twice as fast because crude is cheaper, nor can you slowly switch from using one type of fuel to another(petrol to diesel) solely because its price has changed to be cheaper. The bring out of oil is relatively inelastic. This is because investment in the achievement facilities lures to an annex in fork out, but the cost of pumping out the oil is relatively the same (Hillier, 2005). It get out cost an oil w ar facility near the same amount to produce at half or safe capacity.Main tenance and repairs will only be done if the price of oil is high. In essence, we can say that a small change in the demand and interpret ignore causes a larger change in the clearing price of oil in Russia. As the cost if oil goes up, the Bus fares will incr rest as transporters will try to domesticize the remaining cost from the passenger, consequently reducing the demand for buses. This in persuade will lead to passengers demanding to a greater extent of the train services which are not affected by the rise in oil price, thus the solecism in the demand curve to the right. Indicating a demand for trains.During world the demand for oil was low, thus the downward shift of the demand curve from D1 to D2. This was a result of consumers reflexioning for alternative sources of fuel energy, since the price for oil was high. similarly during the recess, collect 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 achievement, 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 dexterity measures and invests inwind and solar energy There will be less demand for oil from the British as t hey will look for alternative intend for energy, thus the downward shift of the demand curve from D1 to D2. Thus further development in alternative energy resources means that there is spread of technology thus the equivalent point shifts to the left. v) What happens to oil prices if high economic growth continues in India and China. India and china are adjacent the traditional economic growth path which requires huge oil production and use. Since the national resources are limited, large scale of imports are necessary.Larger demands, higher(prenominal) price, higher expectation 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 moot 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 world economy. The world populations is increase daily, signaling an increase i n the demand for oil to meet some of the basic life energy of necessity . It is estimated that the population of India and China will grow by 8.4% and 10% respectively. This alone is a big 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 improve with new technologies being propagated everyday to ensure more but efficient production and distribution of oil to the markets. This will lead to more efficient 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 put in place to do the renovations and maintenances of the oil production facilities. Global economic political situation as with Iran thermonuclear issue, in as much as Iran has high reserves oil and gas, it is has a nuclear development pro gramme 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 afterlife of energy resources in the world.Reports by Market Avenue (2008) shows that this affects the price of oil in the sense that Iran has the second largest oil reservoir, next to Saudi Arabia, and thus shoot a greater control over how their international transaction plays out with the world super powers and the OPEC to regulate the supply and price of oil. concord to Biswajit et al (2007), alternatives to oil, there are increasing alternatives to oil as a source of energy. Many other alternatives like, solar, propane, nuclear energy, bio diesel, hydrogen, battery and ethanol. All these are alternatives to oil that have been proven to work.Even though their use is silent 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 env ironmentally friendly and cheaper than oil. 3. Describe the structure of the world go car industry (25 marks) The first producer of a petrol railway locomotive driven car was Karl Benz, 1885 Mannheim Germany. Over the years many inventions and different models of cars have come. These involve brand 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, South Korea, Brazil, India, Spain, France, and Mexico respectively. The top ten brand names include Toyota, ordinary Motors, Volkswagen, Ford, Hyundai, PSA, Honda, Nissan, Fiat and Suzuki. This is relation to the number if volumes of vehicles the produced in 2009. Depending on the regions, non-homogeneous cars manufacturers have a specific share in the markets in which they direct in.Example is that Thailand is today, already the second largest glob ally, pick-up truck market after the U. S. and is ASEANs largest automotive market and assembler. In her report, Global simple machine restless Industry ever-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 on with their legions of suppliers. The country has become the main production base for auto- mobile exports in South East 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 much 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 increased their investments to make headway comple te 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 grooming Network 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 self-propelled 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. Indiana 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).