llustrate in the below graph the consequences caused by an oversupply (high increase) on supply and a slight decline (small decrease) of demand-What will happen with the price of oil, will increase or decrease? -What about the total quantity of oil production, will increase or decrease? Understanding the oil market: Supply and Demand effects on priceThe global oil market has been affected in the recent years by many factors that induces theglobal price to fall. This consequence is vital for the budget of the oil dependent countries. Afterthe huge decrease on oil price in 2016, many traders and analysts believe that oil markets arestill not immune to many problems and the oil price will tend to fall again.The main factor and problems toward a fall of the oil price started in 2015 but considering thatpeople and oil companies do not tend to react immediately to the change of oil price, thetotal consumption and production of oil did not get any surprised changes in the short-run.The main factor that caused the drop on the oil price is the OPEC failure. The member countriesof OPEC did not agree to stabilize the oil markets, since the organization decided against cuttingproduction at a 2014 meeting in Vienna.It is estimated that if OPEC does not cut production, the result is a further oversupply of oil,causing a pressure on crude oil prices for the long term.On the other hand, we have faced a slight decline of the demand. The economies of Europeand developing countries are weakening, and at the same time, vehicdes are becoming moreefficient, which has caused the demand for fuel to lag. Moreover, many countries are relying onalternative resources than oil, which has further decreased the oil demand. Sof OilConvrightQ of Oil

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llustrate in the below graph the consequences caused by an oversupply (high increase) on supply and a slight decline (small decrease) of demand -What will happen with the price of oil, will increase or decrease? -What about the total quantity of oil production, will increase or decrease?

llustrate in the below graph the consequences caused by an oversupply (high increase) on supply and a slight decline (small decrease) of demand -What will happen with the price of oil, will increase or decrease? -What about the total quantity of oil production, will increase or decrease?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 30P: Predict how each of the following economic changes will affect the equilibrium price and quantity in...

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