Kindly answer QUESTIONS A and B A) “The periods following each of the major OPEC
ID: 1162297 • Letter: K
Question
Kindly answer QUESTIONS A and B
A) “The periods following each of the major OPEC price shocks proved to the world that there were many available substitutes for gasoline, among them bicycles, car pools, moving closer to work, cable TV, and Japanese cars.” Discuss how each of these may be a substitute for gasoline.
B) What market forces lie behind each of these quotations? What difficulties do they reveal for the regulation of particular industries?
“Canadian air travellers opting for U.S. carriers were [partly] responsible for Canadian airline deregulation.” (C.D. Howe Institute) “Canadian consumers crossing the border to buy cheap U.S. agricultural products may be responsible for the end of supply management in Canada.” (Canadian economist)
Explanation / Answer
A)OPEC(organisation of the petrol exporting countries) is the biggest organisation for exporting crude oil. And there has been times where they increase the prices of the crude oil at a very rapid rate. As a cartel creates a type of monopoly and set their own prices which is to be followed by all the members nations of the cartel.
These situations of such high prices of fuel has led the societies to find varioua alternatives for gasoline such as:
Bicycles:- these are a very good mode of transportation and is also an eco friendly way as well. As this mode does not use any fuel and also helps us to maintain our health
Car pools:- this method is used extensively nowdays as people use various apps where people going to the same route can share the car and use the fuel more efficiently.
Moving closer to work:- moving closer to work has led to the reduction in the distance of transportation and has led to less usage of the fuels.
Cable tv:- cable tv has inculcated us the importance of saving nature by using less fossil fuels and opting more eco friendly methods of transportation.
Japanese cars:- the cars are hybrid cars which often uses alternative eco friendly fuels such as electricity and CNG.
B)Canadian airline deregulation was due to the fact that the government had major control over the canadian aviation.
Canadian air travellers chose U.S flights over canadian flights as they were more economical as well as better and they used to cross broders to do that. This led to change in the market forces and further led to decrease in the demand for the canadian airlines.This resulted in the deregulation of canadian airlines and led to more competition from the other airlines. the main reason was to increase outside competition from other airlines and to decrease the control of the canadian government on the aviation.
The canadian consumers crossing the border to buy cheap U.S agricultural products was responsible for the end of supply management in canada because the market forces changed and due to the decrease in the demand for domestic agricultural products this led to end of the supply management in canada. Supply management policy has been described as regressive, protectionist as well as costly.
The prices of the agricultural products were so high that that average canadian was spending 600-800$ more from their U.S equivalent.
The import duty was as much as 300% on butter.
This adversely affected the consumers as well as the farmers.
This led to the end of the supply managed policy.
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