Question

Tracy tells Huey that he can improve his economics grade without sacrificing fun activities or his grades in other courses. Can you imagine ways in which this might be possible? What does that imply about the initial situation? If Huey is taking just two courses and he can improve his economics grade without hurting his math grade, how could you represent this situation graphically? Suppose decreased production of oil in the Middle East causes the price of oil to rise around the world. Explain how this change in the price signals information to U.S. producers of various goods, provides incentives to U.S. producers of various goods, and affects the distribution of income.

Answer 1

This can be achieved by working more intensively for same time period for economics

This implies that initial situation is inefficient. In other words the he is not utilising his time efficiently. He is not giving his 100%.

The rise in prices signals that costs of production will increase. This provides incentive to US producers to raise price. As a result result profits will rise relative to wages. Wages will fall relative to prices and profits. Consumers are harmed and producers gain