Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and (On a piece of scratch paper you should use the 4 step method, draw a diagram, and determine directions of price and quan Cars are becoming more fuel efficient, and therefore get more miles to A. price increase, quantity increase the gallon. B. price decrease, quantity decrease v The winter is exceptionally cold, people need more oil to stay warm C. price decrease, quantity increase v A major discovery of new oil is made off the coast of Norway. D. price increase, quantity decrease

Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and (On a piece of scratch paper you should use the 4 step method, draw a diagram, and determine directions of price and quan Cars are becoming more fuel efficient, and therefore get more miles to A. price increase, quantity increase the gallon. B. price decrease, quantity decrease v The winter is exceptionally cold, people need more oil to stay warm C. price decrease, quantity increase v A major discovery of new oil is made off the coast of Norway. D. price increase, quantity decrease

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 4SCQ: Many changes are affecting the market for oil. Predict how each of the following events will affect...

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Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and quantity in the market for oil. In each case, state how the event will affect the supply and demand diagram. Create a sketch of the diagram if necessary. Cars are becoming more fuel efficient, and therefore get more miles to the gallon. The winter is exceptionally cold. A major discovery of new oil is made off the coast of Norway. The economies of some major oil-using nations, like Japan, slow down. A war in the Middle East disrupts oil-pumping schedules. Landlords install additional insulation in buildings. The price of solar energy falls dramatically. Chemical companies invent a new, popular kind of plastic made from oil.
Lets think about the market for air travel. From August 2014 to January 2015, the price of jet fuel increased roughly 47. Using the four-step analysis, how do you think this fuel price increase affected the equilibrium price and quantity of air navel?
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