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How do you think each of the following affected the world price of oil?(use supply and...

How do you think each of the following affected the world price of oil?(use supply and demand analysis)

A. Oil was discovered in the North Sea

Sport utility vehicles and minivans became popular

C price of oil decreases

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Answer #1

A. Quantity of supply will be increase. Supply curve shifts to the right. Equilibrium price will fall and quantity will increase. Demand is constant. This is a shift in the determinants of supply.

B.Quantity demanded will increase due to an increase in demand for sports utility vehicles and minivans, which are complementary goods. Demand curve shifts to the right. Equilibrium price and quantity will increase.

C. When price of oil decreases, this is a movement along the demand curve for oil. Demand for oil will increase.

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