Reference no: EM132113079

Competency

Explain and demonstrate knowledge of concepts including the supply/demand relationship, price ceilings and floors, and market surpluses and shortages.

Course Scenario

Oil Company X is a large oil refinery which has been expanding and taking on new investment projects. Recently, they have considered building a pipeline that stretches across the United States, from Canada to New Orleans.

The Board is considering a proposal to increase their oil stores to better prepare for events that impact the market price of oil. They have asked you, as a member of the Cost Department, to determine events that effect the price of oil.

They have requested a report explaining the various effects of these events on equilibrium price and quantity.

Instructions

As a cost analyst at your firm, you are asked to evaluate the effects that the following scenarios will have on the supply and demand of oil in the oil market.

You will submit a PowerPoint document with any relevant graphs, including a narration of the shift changes as if you were explaining them to the Board.

Using the drawing tools in PowerPoint, graph the changes to the supply and demand curves in response to the following events:

Regulations are passed which restrict drilling in many areas of the U.S. to preserve protected areas.

The U.S. has a large increase in birth rate and population.

A recession occurs.

There is an increase in availability of affordable, alternative energy sources.

Only one curve (supply or demand) will shift for each of these events.

Be sure to provide an oral explanation to justify why the supply and/or demand curve would shift, the direction of the shift, and the new resulting equilibrium price and equilibrium quantity.

Remember that you do not need to include actual figures, but rather explain if the price and quantity would be increasing or decreasing.

You can use the drawing tools within PowerPoint to draw your graphs.

Also, be sure to include the change in the resulting equilibrium price and equilibrium quantity if any curve shifts occur.