In Kansas, most farmers earn their income from the production of wheat.

Each farmer monitors weather and soil conditions, checks fields for pests and diseases and studies the latest advances in technology so that more wheat will be produced and more income can make him/her better off in his/her standard of living.

Problem Situation: Kansas State University discovered a new technology that will help the farmers to produce more wheat from each acre of land by 20 percent.

Effects: (in general) *it affects the supply curve *it increases the amount of wheat produced on each acre of land *farmers are willing to supply more wheat at any given price *the supply curve shifts to the right *on the other hand the demand curve remains the same because consumers desire to buy wheat products at any given price is not affected by the introduction of the new hybrid.

 *they can produce more wheat as possible *but each bushels of wheat sells for less. *even if the hybrid causes them to worse off, they have no choice because of the competition within the market.

TALKING ABOUT DEMAND *it remains inelastic because it is a normal good which is inexpensive and has fewer substitutes. *the decrease in price causes the total revenue to decrease. Conclusion and solution Improvement for farm technology has bad effects on farmers but good for consumers who will pay less for food. When a policy is implemented to reduce the supply of products farmers produced, it may increase their income but will have no good effect on the consumers expense.

WHY DID OPEC FAIL TO KEEP THE PRICE OF OIL HIGH? In 1970s, the Organization of Petroleum Exporting Countries decided to raise the price of oil worldwide to increase their income. They have decided to reduce supply of oil to achieve the goal they are up to. In 1979 to 1981, the price doubled approximately. From 1982-1985, the price of oil declined by 10 perceper year. This led to the breakdown of the organization nt causing the price to plunge be 45 percent.

In 1990, the price rolled back to its original price(during the year 1970) and has remained the same throughout the 90s. On the first part of the 21st century, it rose again due to the of the consumers demand worldwide.

 These showed how the supply and demand behaved differently in long run and the short run. In the short run, both the supply and the demand are relatively inelastic. o Supply is inelastic because the quantity of known oil reserves and the capacity for oil extractions cannot be changed quickly. o Demand is inelastic because buying habits do not respond immediately to changes in price.

 When the S1 shifts to S2, the shift from p1 to p2 is large. In the long run, over the periods of time, oil producers outside the OPEC respond to high prices by exploration and building new extraction capacity. o The demand and supply are more elastic. o Consumers respond with greater conservation. As the s1 shifts to s2, there is small effect on price.

DOES DRUG INTERDICTION INCREASE OR DECREASE DRUG RELATED CRIME?

DRUGS have been the most crucial and uneasy problem the society faces. The use of drugs can have negative effects on the users and their families. It will induce a person turn to robbery and engage in any violent crime to continually support their habit.

Situation: The government increases the number of federal agents devoted to the war on drugs. EFFECTS (in general) Has direct impact on sellers rather than buyers If the government disallows the drugs to enter the country and they will arrest more smugglers, the cost of selling drugs raises and reduces the quantity of price at any given price. The demand for drugs will not change.

 The interdiction shifts the

supply curve to the left. It increases the price but makes the quantity fall. The fall in equilibrium quantity shows that drug interdiction reduces drug use.

Talking about drug related crime Because it is unlikely for the drug addicts to lessen their use of drugs, the demand for drugs becomes inelastic. If the demand is inelastic, the price of drugs increases the total revenue in the drug market. Drug interdiction increases drugrelated crime.

SOLUTION AND CONCLUSIONS Drug interdiction has adverse effects. There should be an alternative approach. Instead of reducing the supply on drugs, it should be on the demand for it. Drug education might be a good way. It will shift the demand curve from right to left. As a result, the equilibrium quantity falls and it will be directly proportional to the equilibrium price and the total revenue.

 In the long run, the elasticity of demand depends on the time horizon. As the time goes by, the demand will be elastic because the higher prices would discourage experimentation with drugs among the young and would lead to lesser drug addicts over time. Drug related crime would also decrease as the time will pass by.