Question

A news story from 2017 about the oil market stated, "crude oil prices fell... in part [due to] renewed concems about the global supply glut. Source: Paul Ebeling, "Crude Oil Prices Falling, Traders Worry About Global Supply Glut," livetradingnews.com, March 27, 2017. a. In referring to a "global glut," the article describes the result of a significant O A. increase in supply of, relative to the demand for, crude oil O B. increase in demand for, and the supply of, crude oil. O C. increase in demand for, relative to the supply of, crude oil. O D. decrease in supply of, relative to the demand for, crude oil. This change resulted in a O A. a surplus of oil such that there is a greater quantity demanded than quantity supplied of crude oil. O B. a shortage of oil such that there is a greater quantity demanded than quantity supplied of crude oil. OC. a shortage of oil such that there is a greater quantity supplied than quantity demanded for crude oil O D. a surplus of oil such that there is a greater quantity supplied than quantity demanded for crude oil. b. In response to the global glut of oil, the market price will OA. fall to a new, lower equilibrium price at which the quantity demanded would equal the quantity supplied O B. rise to a new, higher equilibrium price at which the quantity demanded would be greater than the quantity supplied O C. fall to a new, lower equilibrium price at which the quantity demanded would be lower than the quantity supplied O D. rise to a new, higher equilibrium price at which the quantity demanded would equal the quantity supplied c. The glut willl start to shrink when crude oil producers Click to select your answer

Answer 1

Q1- Global glut is referred to an increase in supply of crude oil relative to the demand of crude oil. Option A is right becuase above it is mentioned that global crude oil prices fell. Fall in prices occurs when there is more supply then demand. So option A is right.

Q2- this resulted in a surplus of oil such that there is greater quantity supplied then quantity demanded of crude oil. So option D is right. Greater supply will always create surplus of commodity.

Q3- in response to a global glut of oil market price will fall to a new lower equilibrium price where quantity demanded equals quantity supplied.