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Running Head: WEEK 2 1

Running Head: WEEK 2 2

Week 2

Eddie Feliciano

Rasmussen

Author Notes

This research is being submitted on July 21, 2013, for Eddie Feliciano http://rasmussen.learntoday.info/images/misc/whitespace.gif http://rasmussen.learntoday.info/images/misc/whitespace.gif http://rasmussen.learntoday.info/images/misc/whitespace.gifG203/ECO2013 Macroeconomics

Week 2 Answers

The price of oil has an effect on almost every aspect of life. This is because petroleum and petroleum products are linked to almost every consumable good and service through packaging, manufacturing, and transportation. This results in an ever changing supply and demand curve for these products.

Graph one shows an examples of the quantity demanded falling, as the quantity demanded fell, so did the price. The amount supplied shifted in response to this until an equilibrium was reached. The supply dropped because the demand dropped. There was no need to supply at a higher rate when decreasing production would stop the drop in price resulting in a new equilibrium.

Graph two shows that in the economy of China, the quantity supplied rose as the quantity demanded and the price shifted up. As there was a higher demand for the product, production increased to meet that demand and the price rose to help the market reach a new equilibrium.

Graph three shows the effect of an oil embargo. As the quantity supplied is lowered significantly, the price and demand drop as a result. This is a result of people demanding less at a higher price.

Graph four shows an example of the economy of Germany. This graph depicts the quantity supplied rising dramatically and the quantity demanded shifts down as a result. The price drops due to the supply being higher than the demand.

Graph five demonstrates what would happen if OPEC increases oil production. The quantity supplied shift up because of the increase in production, therefore the price drops significantly because the supply is greater than the demand until the market reaches a new equilibrium.