Demand and Supply
This video shows that how the demand curve and supply curve works, how the other factor exclude price can affect the curve, do click on it to watch.
Global oil product demand is expected to rise by a robust 2.5% to 88.2 mb/d in 2008… Non-OPEC supply in 2008 is forecast to reach 51.0 mb/d.Supply and Demand
There is an inverse correlation between price, and quantity demanded. If this is the car market, then at lower price levels, people who couldn’t afford to buy cars, and some families which owned one car, will spend on a second. Demand varies with price. And the same is true of supply:
If the price rises, so will supply. Supply is a function which is at a certain time, at a certain prices that a firm willingly produce the product.
The Oil Shocks of the 1970s
This model can be applied to the oil price shocks of the 1973. Following US support for Israel in the Yom Kippur war, the newly founded OPEC announced it would stop selling oil to the US, and would restrict its overall oil output. Because OPEC supplied so much of the world’s oil, this had the effect of changing the shape of the supply curve. In other words, for any given price level, there would be less oil supplied:
Other Short-Term Changes to Supply and Demand Curves
The rise of emerging markets has also changed the supply and demand dynamics. As China, India and the like industrialize, and their emergent middle classes buy cars, then the demand curve moves to the right. For any given level of price, more oil is demanded. As the chart below shows, this has exactly the same impact on the clearing price of oil as does reducing supply: the price moves, and sharply.
The article above is written by Tham Zi Yang 0315350
The Oil Shocks of the 1970s
This model can be applied to the oil price shocks of the 1973. Following US support for Israel in the Yom Kippur war, the newly founded OPEC announced it would stop selling oil to the US, and would restrict its overall oil output. Because OPEC supplied so much of the world’s oil, this had the effect of changing the shape of the supply curve. In other words, for any given price level, there would be less oil supplied:
As can be seen from the chart above, this restricting of supply caused the blue supply curve to move to the left, and – as the market must clear – the price rocketed. Dropping out of theory and into practice, we see that this is exactly what did happen. The price of Saudi Light oil jumped from under $3 a barrel in 1971 to almost $40 by 1980.
The rise of emerging markets has also changed the supply and demand dynamics. As China, India and the like industrialize, and their emergent middle classes buy cars, then the demand curve moves to the right. For any given level of price, more oil is demanded. As the chart below shows, this has exactly the same impact on the clearing price of oil as does reducing supply: the price moves, and sharply.
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Deletecould you explain the difference between the change of supply and change in quantity supply? how about the determinants of demand? change in supply is non price factor while change in quantity supply is the price factor for the supply function.
ReplyDeletechange in quantity supplied is a movement along the upward sloping supply curve in response to a change market price , and change in supply is a shift in a supply curve.
Deletethere are 4 type of determinants. for example, Income, Consumer Preferences, Number of Buyers, Price of related goods