hw for ECO MICROECONOMICES
alazmi
2014_ql_supply__demand_-_student1.docx
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.).
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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.
