Question

Suppose that the world price of oil is ​$32 per barrel and that the United States can buy all the oil it wants at this price. ​

a. Using the line drawing​ tool, draw a line at the world price of ​$32 per barrel. Label this line ​'PWorld​'. ​
b. Using the point drawing​ tool, determine quantity supplied at ​$32 per barrel. Label this point ​'Upper P 1​'. ​
c. Using the point drawing​ tool, determine quantity demanded at ​$32 per barrel. Label this point ​'Upper P 2​'.

Carefully follow the instructions above and only draw the required objects.

Answer 1

Answer:

Refer diagram in attachment

Explanation:

The market equilibrium price of crude oil is $36. The price offered offered to the United States ($32) is lower than the market equilibrium price.

Thus, at this point, quantity supplied to the U.S is at 10million barrels per day whereas quantity demanded by the United States is at 13million barrels per day. This creates a shortage of 3million barrels per day (13-10).

Diagram notes:

1. Green Line marking: $32 price (PWorld)

2. Orange Line marking: Quantity supplied to the U.S (Upper P1)

3. Purple Line Marking: Quantity demanded by the U.S (Upper P2)