Explain how each of the following events will influence the demand or supply of oil, and predict the change in equilibrium price and equilibrium quantity.
a. New technology greatly improves the extraction of oil from tar sands: It will increase the supply of crude for processing into oil. Assuming demand does not change, the equilibrium price will be lower while equilibrium quantity will be higher.
b. Large sport utility vehicles become unfashionable, and are replaced by hybrid vehicles and greater use of public transit. Both will reduce the demand for oil/energy. Assuming supply remains the same, both the equilibrium price and quantity will lower.
c. Income of consumers decline.
d. Canada and US start producing fuel efficient automobiles.
e. Conventional oil sources are depleted with no new significant discoveries to replace them.