Assignment:
Consider the table below for the supply and demand for oil in the United States.
Supply and Demand for Oil - U.S.
|
Price (Y Axis)
$ per barrel
|
Quantity
Demanded (QD)
Millions of Bls per day
|
Quantity
Supplied (QS)
Millions of Bls per day
|
|
104
|
22
|
12
|
|
106
|
21
|
13
|
|
108
|
20
|
14
|
|
110
|
19
|
15
|
|
112
|
18
|
16
|
|
114
|
17
|
17
|
|
116
|
16
|
18
|
|
118
|
15
|
19
|
|
120
|
14
|
20
|
|
122
|
13
|
21
|
|
124
|
12
|
22
|
1. On the grid below, create a graph depicting the market for oil using the table above, and plot the QD and the QS. (Use EXCEL to plot the graph on a separate sheet if possible, but not required. Use titles on
the graph, axes, and curves.).
2. Define the law of demand, the law of supply, and equilibrium in one sentence each.
3. If the price of oil is $110 per barrel, is this above or below equilibrium, and is there a surplus or shortage in the market? How much is the surplus or shortage? Explain in one or two sentences.
4. From your graph, explain how a change in the QUANTITY SUPPLIED could occur and give a specific scenario.
5. On your graph, draw what would happen if a small INCREASE in the SUPPLY of oil occurred with a larger DECREASE in the DEMAND for oil. Explain the new position of the supply and demand curves, and the new equilibrium of price and QD/QS compared to the old one.