Question

End of Chapter 4.10 Question Help In early 2017, an article in the Financial Times about the oil market quoted the chief economist of oil company BP as saying: "Pricing pressure is likely to come from the supply side, because of strong growth in US shale oil (crude oil found within shale formations), and the demand side as the rise of renewable energy, including electric vehicles, gradually slows growth in oil consumption." After reading this article, a student argues: "From this information, we would expect that the price of oil will fall, but we don't know whether the equilibriunm quantity of oil will increase or decrease Price (dollars per barrel) S1 Source: Andrew Ward, "BP Warns of Price Pressures from Long-Term Oil Glut," Financial Times, January 25, 2017 Is the student's analysis correct? Illustrate your answer with a demand and supply graph. 1.) Using the line drawing tool, graph the effect of growth in U.S. shale oil by drawing a new supply curve. Label your curve'S2 2.) Using the line drawing tool, graph the effect of the increasing use of electric vehicles by drawing a new demand curve. Label your curve D2 3.) Using the point drawing tool, indicate the new market equilibrium. Label your point'e2 Q1 Quantity (barrels of oil) Carefully follow the instructions above and only draw the required objects.