HomeWork Assignment Example | Topics and Well Written Essays - 500 words

HomeWork - Assignment Example The oversupply of oil that cause the supply curve of diesel oil to shift while demand is constant as illustrated graphically above that eventually cause prices to go down as explained by Nadler-Kafferlin Economic Consulting, Group, Inc. According to the dealer of Park Company, the change in prices of gas is not only from changes in normal demand and supply curves, but because it is a complementary good of gas trucks. Thus, changes in price of one good result in effects on the maintenance cost of the other good. More significantly, the increased supply in gas for the next ten years will lead to a decrease in price levels, as the demand levels remain the same. As a complementary good, the cheap prices of gas will be from increased supply and inelastic demand that later causes maintenance of power trucks to be low in the market making it a viable option. It is considerable that changes in price levels in the short run average cost curve always add up together as combined costs in the long-run average cost curve. Based on Nadler-Kafferlin Economic Consulting, Group, Inc advice it is expected that price levels of the diesel oil in the market would change thus, leading to price decreases that will consequently lead to a decrease in the short run average curve. In the end, Ashland Long Haul costs of maintaining the diesel trucks will change over the short run period leading to shift in the eventual long run average cost curve as shown below in the graph where subsets of short run curve lead to the eventual long run curve. More significantly, changes in the prevailing natural gas prices are expected in the next ten years. Therefore, the maintenance cost of gas trucks that remain as a complementary good of natural gas is high currently because the level of changes in the price levels are currently high thus, short run average costs remain high. However, as the price levels change in the end the average