Q.4 Many changes are affecting the m... [FREE SOLUTION]

Chapter 2: Q.4 (page 77)

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.

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The demand curve is going to shift to the left, because fuel efficient cars are going to consume less oil as it gets more miles per gallon.
In exceptional cold weather, people would avoid going outside, thus they will travel less by car. this will lead to fall in demand for oil.
A major discovery of new oil off the coast of Norway will lead to rise in supply of oil.
Slowdown of major oil-using nations like Japan will lead to fall in demand of oil.
In case of a war in the Middle East disrupting oil pumping schedules, the supply falls.
Landlords installation of additional insulation doesn't effect demand or supply of oil directly.
When price of solar energy falls dramatically, the use of oil will be substituted by it. Thus demand for oil will fall.
On invention of a new popular kind of plastic made from oil, the demand for oil will rise.