Consider the table below for the supply and demand for oil in the United States.    Supply and Demand for Oil –…

Consider the table below for the supply and demand for oil in the United States. 

Supply and Demand for Oil – U.S.

                               Y                        X

                               Price                QD/QS

                              $ Per             Millions of Bls Per Day

                               Barrel           D _         S_

                              95              25          15

                              96              24          16

                              97              23          17

                              98              22          18

                              99              21          19

                            100              20          20

                            101              19          21

                            102              18          22

                            103              17          23

                            104              16          24

                            105              15          25

1.  On the grid below, create an X Y graph using the table above, and plot D and S.

     (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 $97 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 DEMANDED could occur and give an example. 

5.  On your graph, draw what would happen if a small DECREASE in the SUPPLY of oil occurred with a larger INCREASE in the DEMAND for oil.  Explain here the position of the new supply and demand curves, and the new equilibrium of price and QD/QS compared to the old one. 

 
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