Quantitative Literacy Assignment NAME____________________________ Supply & Demand ECO 2003 BANNER ID______________________

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, and plot the 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. Define the law of demand, the law of supply, and equilibrium in one sentence each.

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.

4. From your graph, explain how a change in the QUANTITY SUPPLIED could occur and give a specific scenario.

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. Explain the new position of the supply and demand curves, and the new equilibrium of price and QD/QS compared to the old one.

Quantitative Literacy Assignment NAME____________________________ Supply & Demand ECO 2003 BANNER ID______________________

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, and plot the 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. Define the law of demand, the law of supply, and equilibrium in one sentence each.

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.

4. From your graph, explain how a change in the QUANTITY SUPPLIED could occur and give a specific scenario.

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. Explain the new position of the supply and demand curves, and the new equilibrium of price and QD/QS compared to the old one.

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