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The aim of this task is to explore the effects of a supply shock on a firm and thereby on the industry. Suppose that war breaks out in the Middle East, where a considerable portion of the world's oil is produced.
(A) Describe, in words and on your graphs, any changes to (i) demand, (ii) supply,(iii) The petrol manufacturer's optimal quantity, (iv) the short-run equilibrium industry quantity, (v) the short-run equilibrium price, (vi) the short-run consumer's surplus, and (vii) the short-run profits.
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according to the Keynesian model, the short-run aggregate supply curve is horizontal when: A: there are unemployed resources and prices do not fall when aggregate demands falls. B:
Good X is produced in a competitive market using input A. Explain what would happen to the supply of good X in each of the following situations. The price of input A decreases.
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