Question

EQUILIBRIUM CALCULATOR: MARKET FOR HEATING OIL PRICE (Dollars per barrel] 80 Price of Heating Oil 30 Dollars per barrel) Quantity Demanded Thousands of barrels/day] Shortage 70 100 Quantity Supplied 60 60 Thousands of barrels/day) 50 40 Surplus Thousands of barrels/day) Thousands of barrels/day) 40 DEMAND SHIFTERS SUPPLY SHIFTERS 30 Price of Natural Gas [Dollars per 1,000 cubic ft.] Cost of Crude Oil Per barrel of heating oil] 10 25 20 Price of an Oil Furnace [Dollars per furnace] Cost of Refining Oil [Per barrel of heating oil] 2000 10 Average Annual Income Thousands of dollars) 40 20 40 60 80 100 120 140 160 Reset to Initial Values Calculate QUANTITY (Thousands of barrels per day] Suppose that all of the determinants of supply and demand for heating oil are equal to their initial values. (If you've changed any of them, click the Reset to Initial Values button.) The equilibrium quantity in this market is barrels of heating oil per day, and the equilibrium price is per barrel. Suppose that the cost of crude oil increases from $25 to $35 for each barrel of heating oil produced. Assuming that the rest of the determinants of supply and demand for heating oil remain equal to their initial values, the market wil eventually reach a new equilibrium price of oil increases by $10, the price of heating oil increases by per barrel. While the cost of producing each barrel of heating per barre. Reset the calculator to its initial values. Suppose that instead of an increase in the cost of producing heating oil, there was an increase in the price of natural gas from $10 to $15 per 1,000 cubic feet. If the price of heating oil were to remain at the initial equilibrium price you found in the first question, there would be of barrels of heating oil per day, which would exert pressure on price:s

Answer 1

The equilibrium price of heating oil is $ 40 and equilibrium quantity is 80. The equilibrium occurs at the point where demand and supply curve intersect.

The supply curve of heating oil will shift leftwards due to increase in the cost of factor of production by $10, Thus, new equilibrium price is $45 per barrel, thus price of heating oil increases by $5 per barrel.

EQUILIBRIUM CALCULATOR: MARKET FOR HEATING OIL PRICE (Dollars per barrel] 80 Price of Heating Oil 30 Dollars per barrel) Quantity Demanded Thousands of barrels/day] Shortage 70 100 Quantity Supplied 60 60 Thousands of barrels/day) 50 40 Surplus Thousands of barrels/day) Thousands of barrels/day) DEMAND SHIFTERS SUPPLY SHIFTERS 30 Price of Natural Gas [Dollars per 1,000 cubic ft.] Cost of Crude Oil Per barrel of heating oil] 10 25 20 Price of an Oil Furnace [Dollars per furnace] Cost of Refining Oil [Per barrel of heating oil] 2000 10 Average Annual Income Thousands of dollars) 40 20 40 60 80 100 120 140 160 Reset to Initial Values Calculate QUANTITY (Thousands of barrels per day] Suppose that all of the determinants of supply and demand for heating oil are equal to their initial values. (If you've changed any of them, click the Reset to Initial Values button.) The equilibrium quantity in this market is barrels of heating oil per day, and the equilibrium price is per barrel. Suppose that the cost of crude oil increases from $25 to $35 for each barrel of heating oil produced. Assuming that the rest of the determinants of supply and demand for heating oil remain equal to their initial values, the market wil eventually reach a new equilibrium price of oil increases by $10, the price of heating oil increases by per barrel. While the cost of producing each barrel of heating per barre. Reset the calculator to its initial values. Suppose that instead of an increase in the cost of producing heating oil, there was an increase in the price of natural gas from $10 to $15 per 1,000 cubic feet. If the price of heating oil were to remain at the initial equilibrium price you found in the first question, there would be of barrels of heating oil per day, which would exert pressure on price:s

EQUILIBRIUM CALCULATOR: MARKET FOR HEATING OIL PRICE (Dollars per barrel] 80 Price of Heating Oil 30 Dollars per barrel) Quantity Demanded Thousands of barrels/day] Shortage 70 100 Quantity Supplied 60 60 Thousands of barrels/day) 50 40 Surplus Thousands of barrels/day) Thousands of barrels/day) DEMAND SHIFTERS SUPPLY SHIFTERS 30 Price of Natural Gas [Dollars per 1,000 cubic ft.] Cost of Crude Oil Per barrel of heating oil] 10 25 20 Price of an Oil Furnace [Dollars per furnace] Cost of Refining Oil [Per barrel of heating oil] 2000 10 Average Annual Income Thousands of dollars) 40 20 40 6080100 120 140 160 Reset to Initial Values Calculate QUANTITY (Thousands of barrels per day] Suppose that all of the determinants of supply and demand for heating oil are equal to their initial values. (If you've changed any of them, click the Reset to Initial Values button.) The equilibrium quantity in this market is barrels of heating oil per day, and the equilibrium price is per barrel. Suppose that the cost of crude oil increases from $25 to $35 for each barrel of heating oil produced. Assuming that the rest of the determinants of supply and demand for heating oil remain equal to their initial values, the market wil eventually reach a new equilibrium price of oil increases by $10, the price of heating oil increases by per barrel. While the cost of producing each barrel of heating per barre. Reset the calculator to its initial values. Suppose that instead of an increase in the cost of producing heating oil, there was an increase in the price of natural gas from $10 to $15 per 1,000 cubic feet. If the price of heating oil were to remain at the initial equilibrium price you found in the first question, there would be of barrels of heating oil per day, which would exert pressure on price:s

The demand will shift rightwards as natural gas is a substitute of heating oil by $5 and thus there is shortage of 10 barrels of heating oil per day, which would exert upward pressure on prices.