1 Answer | Add Yours
The U.S. is the consumer for oil, which is imported from other countries that are oil suppliers. For any product, the quantity that consumers are willing to buy for a given price of the product is the demand curve. The quantity that producers are willing to sell at a particular price is represented by the supply curve. For most products the demand increases with a decrease in price and the supply increases with an increase in price.
If oil suppliers were to stop selling oil to the US, the supply curve would shift to the right. This represents an increase in the equilibrium price and a decrease in the equilibrium quantity. Oil would suddenly become very expensive in the US. This would adversely affect the economy and lead to rapid rise in price of almost all products which would show up in the form of a large number representing inflation.
We’ve answered 317,852 questions. We can answer yours, too.Ask a question