CIX1001 Microeconomics Assessment

ASSIGNMENT On MICROECONOMICS

QUESTION. Last March, right after the Russian invasion of Ukraine, Americans had to endure a high gasoline price, which reached an all-time high of $4.702 on the West Coast1. To put things into perspective, it only costs $3.161 per gallon a year earlier almost a 50% increase (48.75%).

QUESTION.Explain and draw graphs to show the effect on gasolines demand and supply, both in the short- and long-run (extra marks will be awarded if you are able to support your points using data and statistics from authoritative organizations such as the Bureau of Economic Analysis).

QUESTION.Consequently, the gasoline price increase has also been attributed to the surge in the US inflation rate to an all-time high of 8.5% in March 2022 the highest since December 19812. In your group's opinion, is it demand-pull inflation or cost-push inflation, or both? Why?

QUESTION.Notwithstanding, the US's inflation rate has increased steadily since its economy re-opened post-COVID-19 pandemic. However, according to the former Labor Secretary and professor of public policy at the University of California at Berkeley, Prof Robert Reich, there's a deeper structural reason for inflation, one that appears to be growing worse: the economic concentration of the American economy in the hands of a relative few corporate giants with the power to raise prices3. Do you agree with Prof Reich's point? Why? Or why not?