# 经济代写|微观经济学代写Microeconomics代考|ECON106

## 经济代写|微观经济学代写Microeconomics代考|Can Good News for Farming Be Bad News for Farmers?

Imagine you’re a Kansas wheat farmer. Because you earn all your income from selling wheat, you devote much effort to making your land as productive as possible. You monitor weather and soil conditions, check your fields for pests and disease, and study the latest advances in farm technology. You know that the more wheat you grow, the more you will have to sell after the harvest, and the higher your income and standard of living will be.

One day, Kansas State University announces a major discovery. Researchers in its agronomy department have devised a new hybrid of wheat that raises the amount farmers can produce from each acre of land by 20 percent. How should you react to this news? Does this discovery make you better off or worse off than you were before?

Recall from Chapter 4 that we answer such questions in three steps. First, we examine whether the supply or demand curve shifts. Second, we consider the direction in which the curve shifts. Third, we use the supply-and-demand diagram to see how the market equilibrium changes.

In this case, the discovery of the new hybrid affects the supply curve. Because the hybrid increases the amount of wheat that can be produced on each acre of land, farmers are now willing to supply more wheat at any given price. In other words, the supply curve shifts to the right. The demand curve remains the same because consumers’ desire to buy wheat products at any given price is not affected by the introduction of a new hybrid. Figure 7 shows an example of such a change. When the supply curve shifts from $S_1$ to $S_2$, the quantity of wheat sold increases from 100 to 110 and the price of wheat falls from $\$ 3$to$\$2$.

Does this discovery make farmers better off? Let’s consider what happens to the total revenue they receive. Farmers’ total revenue is $P \times Q$, the price of the wheat times the quantity sold. The discovery affects farmers in two conflicting ways. The hybrid allows farmers to produce more wheat ( $Q$ rises), but now each bushel of wheat sells for less ( $P$ falls).

## 经济代写|微观经济学代写Microeconomics代考|Why Did OPEC Fail to Keep the Price of Oil High?

Many of the most disruptive events for the world’s economies over the past several decades have originated in the world market for oil. In the $1970 \mathrm{~s}$, members of the Organization of Petroleum Exporting Countries (OPEC) decided to raise the world price of oil to increase their incomes. These countries accomplished this goal by agreeing to jointly reduce the amount of oil they supplied. As a result, the price of oil (adjusted for overall inflation) rose more than 50 percent from 1973 to 1974. Then, a few years later, OPEC did the same thing again. From 1979 to 1981 , the price of oil approximately doubled.

Yet OPEC found it difficult to maintain such a high price. From 1982 to 1985, the price of oil steadily declined about 10 percent per year. Dissatisfaction and disarray soon prevailed among the OPEC countries. In 1986, cooperation among OPEC members completely broke down, and the price of oil plunged 45 percent. In 1990, the price of oil (adjusted for overall inflation) was back to where it began in 1970, and it stayed at that low level throughout most of the 1990s. (During the first two decades of the 21st century, the price of oil fluctuated substantially once again, but the main driving force was not OPEC supply restrictions. Instead, booms and busts in economies around the world caused demand to fluctuate, while advances in fracking technology caused large increases in supply.)

The OPEC episodes of the 1970s and 1980s show how supply and demand can behave differently in the short run and in the long run. In the short run, both the supply and demand for oil are relatively inelastic. Supply is inelastic because the quantity of known oil reserves and the capacity for oil extraction cannot be changed quickly. Demand is inelastic because buying habits do not respond immediately to changes in price. Thus, as panel (a) of Figure 8 shows, the short-run supply and demand curves are steep. When the supply of oil shifts from $S_1$ to $S_2$, the price increase from $P_1$ to $P_2$ is large.

The situation is very different in the long run. Over long periods of time, producers of oil outside OPEC respond to high prices by increasing oil exploration and by building new extraction capacity. Consumers respond with greater conservation, such as by replacing old inefficient cars with newer efficient ones. Thus, as panel (b) of Figure 8 shows, the long-run supply and demand curves are more elastic. In the long run, the shift in the supply curve from $S_1$ to $S_2$ causes a much smaller increase in the price.

This analysis shows why OPEC succeeded in maintaining a high price of oil only in the short run. When OPEC countries agreed to reduce their production of oil, they shifted the supply curve to the left. Even though each OPEC member sold less oil, the price rose by so much in the short run that OPEC incomes rose. In the long run, however, supply and demand are more elastic. As a result, the same reduction in supply, measured by the horizontal shift in the supply curve, caused a smaller increase in the price. Thus, OPEC’s coordinated reduction in supply proved less profitable in the long run. The cartel learned that raising prices is easier in the short run than in the long run.

# 微观经济学代考

## 经济代写|微观经济学代写Microeconomics代考|Why Did OPEC Fail to Keep the Price of Oil High?

1970 年代和 1980 年代的欧佩克事件显示了供需在短期和长期中的表现如何不同。短期来看，石油的供需都比较缺乏弹性。供给是缺乏弹性的，因为已知石油储量和石油开采能力不能迅速改变。需求缺乏弹性，因为购买习惯不会立即对价格变化做出反应。因此，如图 8 的面板 (a) 所示，短期供需曲线是陡峭的。当石油供应从小号1至小号2，价格从磷1至磷2很大。

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