Assume that oil speculators buy oil and put it in storage. Shift one of the curves in the accompanying graph to show the effect of this speculation and then place the equilibrium point, E, at the new equilibrium price and quantity. What is the new price? $ 25 Why is speculation advantageous for future consumption? It tends to smooth prices over time. Today's prices are higher than future prices. Speculation is not advantageous. Future prices will be higher. Price (S/barrel) 8888888888822 100 96 90 85 80 75 70 65 60 55 25 20 15 10 6 0 0 50 1 D 2 3 4 5 6 Quanity (millions of barrerts).

Assume that oil speculators buy oil and put it in storage. Shift one of the curves in the accompanying graph to show the effect of this speculation and then place the equilibrium point, E, at the new equilibrium price and quantity. What is the new price? $ 25 Why is speculation advantageous for future consumption? It tends to smooth prices over time. Today's prices are higher than future prices. Speculation is not advantageous. Future prices will be higher. Price (S/barrel) 8888888888822 100 96 90 85 80 75 70 65 60 55 25 20 15 10 6 0 0 50 1 D 2 3 4 5 6 Quanity (millions of barrerts).

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter4: Demand, Supply, And Market Equilibrium

Section: Chapter Questions

Problem 25P

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