2) In a short term,people will tend to take public transport instead of driving their private car, however if it happens in a long term, people may buy hybrid or LPG cars as a substitute of petrol cars in order to save their money.

3) The increase of oil and fuel price, causing consumers to find out alternative ways of transport. The quantity demand for fuel will fall, leading to a decrease in the price.

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A subsidy creates disequilibrium because when a subsidy is introduced it lowers the price of petrol market in Malaysia. In turn with lower prices, the quantity demanded increases and there is not enough supply to meet demand, this causes a "disequilibrium", there will always be this deficiency of supply not meeting demand. If no subsidy is introduced then businesses would increase the price of petrol the would cause the quantity demanded to decrease and therefore eventually demand and quantity supplied would be the same, or reach equilibrium.

2) Give two examples of how consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia.

People could utilize public transport more as they would save money on petrol for their own personal vehicle or people in malaysia could also switch or start to buy cars that consume less petrol and use the petrol more efficiently to save on the amount of petrol they consume and therefore the amount of money they spend on petrol.

3) How could making fuel more expensive to consumers in the short-run actually lead to a fall in oil and fuel prices in the long-run?

When the fuel is made more expensive in the short run would cause people to look for alternatives like the things in question 2, because it has become more expensive to fill their own personal cars with petrol than before. This would then cause the demand for fuel to decrease and therefore to counter this decrease in demand and to gain an equilibrium again the price of fuel would again fall in the long run.

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2. Consumers than tends not to purchase petrol as the price of petrol is increased due to removal of subsidy. Therefore, the demand curve will shift to the right. Plus, in long-run, people will buy more small cars and decrease the quantity of purchasing large cars. As a result, the price of small cars will increase, and price of large cars will decrease. Moreover, people will tend to purchase more on substitute goods.

3. Making fuel more expensive to consumers in the short run could actually lead to a fall in oil and fuel prices in the long run as the price of fuel will permanently constant in relatively higher price, people start to change to the uses of related goods in consideration of purchasing petrol. And in order to satisfy consumers, the market has to decrease in price of petrol eventually.

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2. Two examples will be the consumer may use alternative ways of transportation such as public bus and MRT, or they may also use hybrid car.

3. The consumer may not be able to pay or afford to pay as it leads to decrease in demand. People may use public transport instead of using their own car due to increase in price of petrol.

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When the price is set at a maximum price the quantity demand exceeds the quantity supply. Without the government interference, there will be a shortage and disequilibrium in the market.

Give two examples of how consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia.

In a short term, people will stop using cars and use another means of transport. They will reduce their use of cars because of the high fuel price and find alternative ways such as using public transport. However in the long term, people will buy hybrid or LPG cars which substitutes petrol powered cars. They think that it will save their money in the long term.

How could making fuel more expensive to consumers in the short-run actually lead to a fall in oil and fuel prices in the long-run?

When the oil and fuel price increases, consumers will find alternative ways of transport. The quantity demand for fuel will decrease, leading to a decrease in the price in the long run.

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2. two examples:

- Because the price increases 40%, some of people have not money to drive car anymore so they have to start thinking about alternative choices such as public transition. (increase in the use of public transition, train and busses)

- People who have money to drive car, they may start buying cars that are cheaper to drive in order to save money. People start preferring cars that don't use so much petrol. (increase in the selling of cheap and small engined cars)

3. Because when the prices are put up in really short time, petrol companies notice that the price is too high and the oil and petrol selling falls dramatically. They start putting prices lower in order to achieve equilibrium of the market. Summary: too high price, excess supply -> companies put price lower, reduce in supply= equilibrium

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A subsidy would create a disequilibrium in a product market, such as the petrol market in Malaysia, since the quantity demanded will increase. Since there's more demand, there will also be an increase in quantity, therefore causing the demand curve to shift to the right, and therefore causing a disequilibrium in the product market.

2) Give two examples of how consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia.

If there is a 40% increase in petrol prices after the subsidy has been removed, then a majority of the consumers may start to use other related products for transportation such as taking public transportation, using a bike, or walking.

3) How could making fuel more expensive to consumers in the short-run actually lead to a fall in oil and fuel prices in the long-run?

Making fuel more expensive to consumers in the short-run may lead to a fall in oil and fuel prices in the long-run because making fuel more expensive will decrease the quantity demanded by the consumers and so people will most likely use public transportation or bikes or walk. The quantity supplied will increase and therefore cause a disequilibrium. There will be excess supply and therefore the prices of oil and fuel will decrease until it reaches a point where the quantity supplied is the same as the quantity demanded.

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Because the government provides a petrol subsidy, which means the petrol price decreases to customers. They cost lesser money in using petrol, so the demand for petrol increases, the curve of QD shifts to right. But at the same time, the quantity supplied is not enough to satisfy the demand, so the equilibrium point goes upper, and there is a excess demand (disequilibrium).

2. Give two examples of how consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia.

As the price goes up, customers may:

1. Use more public transportation, cycling or walking instead of driving their own car;

2. Buy a smaller car which requires less petrol to run, or a green car which uses new type of energy such as hydrogen or electricity.

3. How could making fuel more expensive to consumers in the short-run actually lead to a fall in oil and fuel prices in the long-run?

Making fuel more expensive actually decreases the quantity demanded, that many people choose to change their habits and turn to public transportations in order to save money. The quantity supplied is excess as fewer people are willing to pay for expensive petrol. In order to sell more petrol, petrol suppliers need to lower the petrol price, otherwise, they could not make enough profit at such a low demand.

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By the subsidy, it can create the disequilibrium because by get the subsidy, the producers can produce more product by the subsidy, which mean it can increase the supply and increased the quantity demand. therefore, it creates to disequilibrium.

2. Give two examples of how consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia.

By increasing of petrol price, people prefer to using the public transport or walk to go to the place instead of using car.

3. How could making fuel more expensive to consumers in the short-run actually lead to a fall in oil and fuel prices in the long-run?

by making fuel more expensive to consumers in the short-run will lead to a fall in oil and fuel price in the long-run when price increase. it causes to people to choosing ride pubic transport instead of using their own car or by new car because of price increase. so that later on, there will be less people to willing to buy a new car so that it goes to decrease the demand of oil and fuel.

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2) One way in which the consumers may respond to the increase in petrol price is to buy a new compact car in which requires less petrol. This may also mean hybrid car where you don't need petrol. The reason for the consumers to buy compact car when the petrol price increases is obviously because they are substitute of each other. However, this depends on whether the price increases by large amount in short or long term. When the price increases gradually, people will buy a new petrol efficient car as they think they can benefit more by doing so over time. When this is short-term increase in price, the consumers will most like just stop using the car.

Another option is to use public transportation. As the government plans to subsidize the price of public transportation, the consumers will find more benefit in using it, instead of paying extra 40% a year to use their car.

3) Making fuel more expensive to consumers in the short run lead to a fail in oil and fuel pince in the long run as when the price increases, the quantity demanded decreases as people can't afford paying the money. This way the consumer will change the transportation into public transportation or other way in which they can afford it. Consumers will be less willing to buy a new car and therefore the demand decreases again.

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A subsidy is a grant that the government pays to firms to lower their cost of production so that firms are able to supply more. A subsidy creates disequilibrium in a product market like the petrol market in Malaysia because since the government is granting petrol firms with subsidies, petrol firms lower their prices but substitute firms cannot lower their prices to compete with the subsidized firm as they wouldn't be making any profit if they were selling under their cost of production price. Therefore, disequilibrium in a product market is created because you have two substitute firms selling at different prices creating disequilibrium.

2. Give two examples of how consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia.

Consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia by taking public transport or carpooling and the second example is that people in Malaysia would buy more fuel efficient cars as the cars would not require so much petrol and the people would not have to pay the rising prices. This would decrease the quantity demanded for fuel which correlates of the increase in price. (law of Demand)

3. How could making fuel more expensive to consumers in the short-run actually lead to a fall in oil and fuel prices in the long-run?

Making fuel more expensive to consumers in the short run could actually lead to a fall in oil and fuel prices in the long run because at the moment, with the price of fuel being high, the quantity demanded is obviously low but in the long run, when Firms are running out of business as no one wants to buy fuel that is costly(low quantity demand) firms would have to lower their price so that they can earn profits. By doing this, they would increase the quantity demanded.

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2.As the petrol prices increase by 40% the Malaysians will respond in obvious ways. Evidently, they will walk, cycle or use public transportation. Secondly, there could be an increase in demand for fuel-efficient or even battery-operated cars.

3.If the petrol prices were to increase the demand for it would obviously decrease. Therefore, people would be forced to change their habits by switching to fuel-efficient cars and perhaps altering their heating systems to geothermal systems. The law of demand states that, all other things equal, more will be demanded at lower prices than at higher prices. In this case, this law can be illustrated with the increase in petrol prices. As fewer consumers buy petrol, the price will fall to attract potential customers. Once the demand for petrol increases again, the prices will increase to maximize profit and to produce enough to satisfy the consumers.

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Although subsidy will most likely to move the supply curve to the right, well that’s the general rule. In this case (from the information given), the subsidy did not shift the supply curve to the right, instead, it lower the price and cause the quantity demand to increase which will then cause excess demand since there is not enough petrol to satisfy every customers. (disequilibrium)

Give two examples of how consumers may respond to the 40% increase in petrol prices once the subsidy is removed in Malaysia.

one example would be that, the consumers will start to find alternative means of transportation, public transports, carpooling and or bicycles for example. The other example is to use less petrol, driving less or a more economical car engine (which burn less fuel for the same distance.

How could making fuel more expensive to consumers in the short-run actually lead to a fall in oil and fuel prices in the long-run.

the market will always find the way back to the old equilibrium. By increasing the price of petrol the people will try to find alternative or reduce usage of petrol, and when they do find the alternatives to fuel, it is most likely that they will stay to that alternative until the fuel price decrease or they might just stick to that alternative. By reducing the consumer’s quantity demand, the fuel producer will have to decrease the price on fuel to gain customers which will then send the supply and demand graph to it’s equilibrium state.

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Subsidy is a sort of policy that government set up in order to encourage the market, therefore everyone are trend to be more personal preference to self-driving caused by the fall price of petrol. And the quantity demand will increase and that will lead to a Quantity Demand shift to the right, so there subsidy of petrol market in Malaysia will create disequilibrium in the market.

2. Give two examples of how consumers may respond to the 40% decrease in petrol prices once the subsidy is removed in Malaysia?

First of all, because of the removing subsidy policy and the prices of petrol are increasing back so people might make a opportunity cost of taking less self-driving instead of taking public transportations, and secondly, consumers could choice another sort of cars that run out without petrol or less, maybe electricity cars?

3. How could making fuel more expensive to consumers in the short- run actually lead to a fall in oil and fuel prices in the long- run?

Making fuel more expensive to consumers will change people' preference of the fuel and the quantity demand of petrol will decrease and that the market therefore would be in a excess supply situation, so the best way of dealing it is reducing the fuel prices so that the market will trying to be back in the equilibrium level, and it needs a long period of time.

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Malaysian consumers may react in one of several ways to this increase in price.

They may for example decide to shift their consumption to a direct substitute of petrol and run their cars on biofuel, but this a highly unlikely response in a developing nation like Malaysia. Or, they can respond by switching consumption to public transport. This causes a shift in the demand for car transport, a compliment for fuel, and leads to a decrease in demand in both markets. This option seems more likely.

Making fuel expensive will, in the short run, lead to a decrease in demand for oil and fuel prices and people replace them with substitute goods. This then creates a glut on the market as demand is too low to meet the supply. In theory, the price of oil should then fall until the market clears, and finds a new point of equilibrium.

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