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. (On a piece of scratch paper you should use the 4 step method, draw a diagram, and determine directions of price and quantity) ✓ Cars are becoming more fuel efficient, and therefore get more miles to the gallon. ✓ The winter is exceptionally cold, people need more oil to stay warm ✓ A major discovery of new oil is made off the coast of Norway. ✓ The economies of some major oil-using nations, like Japan, slow down ✓ A war in the Middle East disrupts oil-pumping schedules ✓ Landlords install additional insulation in buildings ✓ The price of solar energy falls dramatically. A. price decrease, quantity increase B. price decrease, quantity decrease C. price increase, quantity increase D. price increase, quantity decrease QUESTION 4 What is the effect of a binding price ceiling on the quantity demanded of a product?
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. (On a piece of scratch paper you should use the 4 step method, draw a diagram, and determine directions of price and quantity) ✓ Cars are becoming more fuel efficient, and therefore get more miles to the gallon. ✓ The winter is exceptionally cold, people need more oil to stay warm ✓ A major discovery of new oil is made off the coast of Norway. ✓ The economies of some major oil-using nations, like Japan, slow down ✓ A war in the Middle East disrupts oil-pumping schedules ✓ Landlords install additional insulation in buildings ✓ The price of solar energy falls dramatically. A. price decrease, quantity increase B. price decrease, quantity decrease C. price increase, quantity increase D. price increase, quantity decrease QUESTION 4 What is the effect of a binding price ceiling on the quantity demanded of a product?
Chapter1: Making Economics Decisions
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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.
(On a piece of scratch paper you should use the 4 step method, draw a diagram, and determine directions of price and quantity)
✓ Cars are becoming more fuel efficient, and therefore get
more miles to the gallon.
✓ The winter is exceptionally cold, people need more oil to
stay warm
✓ A major discovery of new oil is made off the coast of
Norway.
✓ The economies of some major oil-using nations, like
Japan, slow down
✓ A war in the Middle East disrupts oil-pumping schedules
✓ Landlords install additional insulation in buildings
✓ The price of solar energy falls dramatically.
QUESTION 4
A. price decrease, quantity increase
B. price decrease, quantity decrease
C. price increase, quantity increase
D. price increase, quantity decrease
What is the effect of a binding price ceiling on the quantity demanded of a product?
Demand will rise
Supply will change in response to a change in demand
Demand will fall
Expert Solution
Step 1
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Supply and Demand:
In a market economy, both the price of a product and the quantity of that product sold are computed by the forces of supply and demand. Once the market touches equilibrium, it will remain there until there is a shock to the supply, the demand, or both.
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