Homework Help

If our oil suppliers suddenly stopped selling oil to the U.S., which curve would shift?...

user profile pic

yemawe52 | (Level 2) Honors

Posted June 8, 2013 at 6:03 AM via web

dislike 0 like

If our oil suppliers suddenly stopped selling oil to the U.S., which curve would shift? What would then happen to our economy?

1 Answer | Add Yours

user profile pic

justaguide | College Teacher | (Level 2) Distinguished Educator

Posted June 8, 2013 at 6:21 AM (Answer #1)

dislike 1 like

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.

Join to answer this question

Join a community of thousands of dedicated teachers and students.

Join eNotes