Question

1.How do you measure the efficiency of resource allocation? Give an example for a real-world application of measuring the efficiency of resource allocation.

2.Suppose the geographical tension in the Arab states in the Middle East and Persian Gulf region has severely disrupted oil exports to the United States. Illustrate and explain in your own words the effect on the price of natural gas and the quantity demanded equal to quantity supplied in the US market due to this decline in the supply of petroleum (fossil Fuel) from the Middle East and the Persian Gulf. Hint: Please assume that petroleum and natural gas are substitutes.

Answer both questions carefully and I ill give you a thumps up

Answer 1