Question

34. Consider the following events (i) through (x). Decipher how each event will influence the world demand and supply of oil (shift ich, shin right, or no shint) and resulting impact on the price of oil (up or down) Provide a brief (one sentence) reason why-i.c. what determinants of supply or demand are changing to cause the resultant effect? If the answer is not clear, say so. (5 pts each) (Tip: A demand and supply disgram for the oil market as it is the easiest way to tack price changes when the curves shift.) EVENT: DEMAND FOR OIL SUPPLY OF OIL. PRICE OF OIL SUITS! SHIFTS: MOVES: i. Brazil discovers massive oil Same Upwards Upwards reserves off its coast Reasoning ii. New electric powered cars are a hit with US Consumers Reasoning Same Saune lil. Global recession reduces consumer incomes worldwide Reasoning Downwards Downwards iv. Coal miners go on strike in Europe, many coal mines shut down Reasoning Same Upwards Upwards v. More efficient oil drilling equipment is introduced Reasoning:

Please fill in the graph that's what I need help with

Answer 1

1)Brazil discovers massive oil reserves: The demand would remain the same as this is a supply side factor. The supply would increase since the reserves have been discovered.

Hence the supply curve shifts to right. Since the demand is the same and only the supply has increased, the price would reduce or go down.

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2)New electric vehicles are a hit:

this would increase the demand for electric vehicles thereby reducing the demand for gasoline and oil. Hence the demand would reduce, shifting the demand curve to the left. On the other hand the supply would not change.

So the price would go down.

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3) global recession reducing incomes: This would reduce the demand for the oil and Hence the demand curve would shift to left. The supply in the short run would not change since the oil has already being procured.

So the price would go down.

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4) Oil and coal are considered substitutes in some situations. So a reduction in supply of coal would mean that the workers would find jobs in oil Sector and the suppliers would tend to supply more of oil.

The demand would remain the same and so the price would go down since the supply of oil has increased.

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