Running head: ECONOMICS ASSIGNMENT Economics AssignmentName of the StudentName of the UniversityAuthor Note
1ECONOMICS ASSIGMENT Table of ContentsIntroduction:....................................................................................................................................2Article Summary:.........................................................................................................................2Essay Overview:..........................................................................................................................2Article Analysis:..............................................................................................................................3Equilibrium in Oil Market:..........................................................................................................3Current Demand Supply Imbalances:..........................................................................................4Elasticity of Demand:..................................................................................................................6Consumer surplus:.......................................................................................................................7Market efficiency in long run:.....................................................................................................9Conclusion:......................................................................................................................................9References......................................................................................................................................10
2ECONOMICS ASSIGMENT Introduction: Article Summary: The article “Global oil demand to exceed expectations in 2017, says IEA; OPEC cutssupply” by Karen Gilchrist, published on 13th September, 2017, sheds light on the recentfluctuations in the global oil market due to the occurrence of several external phenomena ofsignificant implications on the supply of oil. According to the article, as per the predictions of theInternational Energy Agency, the global demand for oil is expected to increase at a faster rate inthe current period, then it was previously expected (Gilchrist 2017). This, clubbed with the fall insupply of oil, is leading to a rebalancing of the oil market, as it is driving out the scope of excessstock of oil. However, the supply of oil is has reduced significantly due to phenomena like thedisrupting supply from Libya and the occurrence of Hurricane Harvey, the latter one leading to adaily shutting down of production of nearly 200,000 barrels. This drastic decrease in the supplyof oil has led to a condition in the market where the current prices are much higher than thefuture expected price. The article signals towards a price hike in the near future, though it doesnot give any specific estimate of the hiked price (Forbes.com 2017). Essay Overview: The essay takes into account the current issue of great concern that has been discussed inthe concerned article. The phenomenon of the fall in supply of oil and its implications on theglobal oil demand and the reasons behind such implications are being studied in the essay. Tostudy the market fluctuations and the stabilizing process, the essay takes reference of differentmicroeconomic concepts like that of demand and supply, changes in demand and supply andtheir effects on price, elasticity and market efficiency (Rader 2014).
3ECONOMICS ASSIGMENT Article Analysis: Equilibrium in Oil Market: Oil, being one of the primary necessary commodities for every household and industry inevery corner of the world, much of the welfare of the world as a whole depends on the demandand supply situations of the international oil market. Any fluctuation in any of the two forces canlead to huge repercussions on the overall lifestyle of people as a whole. In general, any market(oil market being no exception), remains in an equilibrium situation, when the demand and thesupply forces mutually interact with each other and reach a mutually agreeable point, which canbe shown as follows: Figure 1: Equilibrium in the market(Source: As created by the author)
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