Impact on equilibrium price and quantity in certain cases.

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Chapter 3, Problem 8P

To determine

Impact on equilibrium price and quantity in certain cases.

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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. a. Cars are becoming more fuel efficient, and therefore get more miles to the gallon. b. The winter is exceptionally cold. c. A major discovery of new oil is made off the coast of Norway. d. The economies of some major oil-using nations, like Japan, slow down. e. A war in the Middle East disrupts oil-pumping schedules. f. Landlords install additional insulation in buildings. g. The price of solar energy falls dramatically. h. Chemical companies invent a new, popular kind of plastic made from oil.

Which of the following would not cause a decrease in the demand for bananas? a. Reports surface that bananas are infected with a deadly virus. b. Consumers’ incomes drop. c. The price of bananas rises. d. A deadly virus kills monkeys in zoos across the United States. e. Consumers expect the price of bananas to decrease in the future.

Select the phrase that correctly completes the following statement. "A decrease in the expected future price caused an increase in the supply of smartphones. As a result, OA. the price of smartphones decreased and the demand for smartphones increased." B. the equilibrium quantity of smartphones decreased." OC. the price of smartphones decreased and the quantity of smartphones demanded increased." OD. the price of smartphones decreased. The lower price caused the supply of smartphones to decrease."