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. 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.

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Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 24QP

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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.

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.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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