Enron Analysis

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1. Think about the demand for the three popular game consoles: Xbox, PS3 and Wii. Explain the effect of the following event on the demand for Xbox games, and the quantity of Xbox games demanded, other things remaining the same. a) The price falls

b) The price of a PS3 and a Wii fall
c) The number of people writing and producing Xbox games increases d) Consumers income increase
e) Programmers who write codes for Xbox games become more costly to hire f) The price of an Xbox game is expected to fall
g) A new game console is developed and marketed that is a close substitute to Xbox

a) Increases
b) Decrease
c) Increase
d) Increase
e) Decrease
f) Decrease
g) Decrease

2. Read Oswald, A (2001) “Economics that matters: Using the Tax System to Solve the Shortage of Human Organs” Kyklos Vol 54 (2-3), 379-81, available from the subject eLearning website and discuss his proposal for reducing deaths due to the shortage of organs for transplant. In your discussion, use terms such as supply, demand, quantity supplied, quantity demanded, and draw demand/supply diagrams to clarify your discussion.

The supply of organs from organ donor’s does not meet the demand of organ’s. There is a huge shortage of donors, which poses a massive problem. In a perfect world, the quantity demanded would meet the quantity supplied and the market for organs would be in equilibrium, as in the following graph:

Oswald suggests that a tax bracket/incentive could bring supply and demand closer together. As in the UK, the quantity of organs demanded is 6000 and the quantity supplied is only 3000. A tax incentive will be an economic cost, yet the benefits are great and may cancel out the extra cost to taxpayers.
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