Question

3. Answer the questions below, using an article from a newspaper, magazine, or relevant online source that is about a specific market and that indicates a change in price of the product. Remember to attach original source information (URL if online source) to your assignment.

1. Summarize events that may have caused changes in demand and/or supply, describe their effects on price and quality.
2. Draw a demand and supply diagram to illustrate the changes.

Answer 1

The changes in the supply and demand leading to changes in the equilibrium values of price and quantity can be seen in oil market. In the oil it is assumed that initial equilibrium occurs at point E1 where P1 is the initial price level and Q1 represents the initial equilibrium level of quantity. Due to fall in global growth and trade tensions all over the world, it is feared that there will be oversupply of oil in the oil market which will shift the supply curve rightwards to S'S'and thus new equilibrium moves from point E1 to point E2 where there is fall in equilibrium price level and increase in the level of equilibrium quantity of oil in the oil market.