Question: Suppose that you have been hired as an economic consultant by OPEC and given the following schedule showing the world demand and supply for oil.
Your advice is needed on the following questions (use the diagram):
1- What is the price, quantity of supply and quantity of demand in equilibrium situation?
2- If the price raises from $20 to $30 a barrel, will the total revenue from oil sales increase or decrease?
3- What are the values of the price elasticity of booth demand and supply for price changes from $20 to $30 a barrel?
4- If the price of oil degrease from equilibrium price $30 to new price $20 then:
5- What do we call the gap between the quantity demanded and quantity supplied?
6- What is its value?
7- What is your advice to return to the equilibrium situation?