Asked by Viraj Mistry on May 12, 2024
Verified
A recent news story reported that the Organization of Petroleum Exporting Countries is expected to decrease the supply of oil next summer.Summer is traditionally a time of increased demand for oil because of vacation travel.What would be the combined effect of these two events on the summer market for gasoline?
A) an increase in the price and the quantity
B) an increase in the price and an unpredictable change in the quantity
C) an unpredictable change in both the price and the quantity
D) an unpredictable change in the price and a decrease in the quantity
Organization of Petroleum Exporting Countries
An intergovernmental organization of 13 oil-producing nations that coordinates and unifies the petroleum policies of its member countries to stabilize oil markets.
Vacation Travel
The act of traveling for pleasure or leisure to destinations away from one's usual environment.
- Analyze the impact of external factors on supply and demand curves.
- Assess the market implications of shifts in supply and demand dynamics.
Verified Answer
AG
Aba Gyesiwah ArhinMay 14, 2024
Final Answer :
B
Explanation :
The decrease in oil supply by OPEC and the increased demand during summer would lead to an increase in gasoline prices due to the higher demand and lower supply. However, the change in quantity is unpredictable because it depends on the extent of the supply decrease and demand increase, as well as how consumers and other producers respond to the price change.
Learning Objectives
- Analyze the impact of external factors on supply and demand curves.
- Assess the market implications of shifts in supply and demand dynamics.