Reference no: EM13972846

Quantitative Literacy Assignment

Supply & Demand ECO

Consider the table below for the supply and demand for oil in the United States.

Supply and Demand for Oil - U.S.

Price (Y Axis) $ per barrel	Quantity Demanded (QD) Millions of Bls per day	Quantity Supplied (QS) Millions of Bls per day
104	22	12
106	21	13
108	20	14
110	19	15
112	18	16
114	17	17
116	16	18
118	15	19
120	14	20
122	13	21
124	12	22

1. On the grid below, create a graph depicting the market for oil using the table above, andplotthe QD and the QS.(Use EXCEL to plot the graph on a separate sheet if possible, but not required.  Use titles on the graph, axes, and curves.).

2. Market curves

a. Calculate the slope of the demand curve using data in the table/graph.

b. Calculate the slope of the supply curve using data in the table/graph.

c. Based on your calculations,what do the slopes of the curves indicate in this market? How does the slope of the demand curve and supply curve relate to the law of demand and the law of supply? Use 3-4 well -written sentences including numerical examples from the data given.

3. If the price of oil is $110 per barrel, is this above or below equilibrium, and is there a surplus or shortage in the market?  How much is the surplus or shortage?  Explain in one or two sentences using specific numerical calculations.

4. From your graph, explain how a change in the QUANTITY SUPPLIED could occur and give a specific scenario and include numerical examples from the data given.

5. On your graph, draw what would happen if a small INCREASE in the SUPPLY of oil occurred with a larger DECREASE in the DEMAND for oil.  Explainthe result using 2-3 well-written sentences and include numerical examples from your new graphical outcome including the new equilibrium of price and QD/QS compared to the old one.