Relevant text material: Chapters 1, 4 & 5Market prices can be quite volatile at times. Gasoline prices provides a good example. On the morning of 9/11 (2001) terrorists flew airplanes into the World Trade Towers, killing nearly 3000 people. As the day progressed gasoline prices rose dramatically, doubling (or more, in some places) from morning prices. After a few days, prices returned to just above their pre-9/11 levels. Explain – using our demand and supply model of markets why gasoline prices rose so dramatically that day.Were sellers of gasoline gouging buyers with higher prices? Were they taking unfair advantage of a terrible situation? Explain and justify the stand you take on this normative question.Was gasoline more valuable on the evening of 9/11 than it was on the morning of 9/11? Was gasoline more scarce on the evening of 9/11 than it was that morning? In your explanation, remember that scarcity and value are terms that have specific meanings in economics OPTION 2: Relevant text material: Chapters 4 and 7 Would it be more efficient than current arrangements if we were to allow an open market for buying and selling of human organs to develop? (Before you take a position on this “positive” (see ch. 2) question, be sure to consider how human organs are currently rationed among people who want them, and the current arrangements for inducing the supply of human organs. Also, be mindful of our definition of efficiency! Would a market for human organs increase total welfare (see ch. 7) or reduce it? Explain.
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