Bus305 case 2CASE READING:Oil Prices: Demand and SupplyAnderson,
R and J. Buol (2005). “What is Driving Oil Prices.” The Regional
Economist. The Federal Reserve Bank of St. Louis. Retrieved from:
http://www.stlouisfed.org/publications/re/2005/a/pages/oil_prices.cfmUsing the Case Assignment reading, answer the following questions in a 4- to 5-page essay.1. How do changes in supply and demand affect oil prices?2.
a. Explain what happens to quantity of oil demanded when the price of
oil decreases, assuming that the supply doesn’t change. (Hint: Law of
demand, movement along the curve).b. Explain what happens to the
price of oil and quantity of oil supplied when Congress approves
drilling for the reserves in Alaska, assuming that the demand doesn’t
change. (Hint: Law of supply, movement of the curve).c. Explain
what happens to the price of oil and quantity of oil demanded when if
China experiences rapid economic growth, assuming that the supply
doesn’t change. (Hint: Law of demand, movement of the curve).For
each event, you must specify how it effects either demand, quantity
demanded, supply, or quantity demanded. Please use the background
material to find the appropriate term. It is also important to
demonstrate how the change will affect the market demand or supply
curve. Also, be sure to state any assumption you are making regarding
the relationship of the event and oil, for example, the increasing use
of plastics to produce a wide range of products.Assume that
petroleum products are used as a factor of production. This will
increase the demand of oil and shift the demand curve to the right. This
will cause the price and quantity of oil to increase.3. Gas
prices have reached record highs in many states. Would you advocate a
price control for oil so that you pay less than the market price at the
pump? Why or why not? (Be sure to include your own research to support
your answer. You can also review the 1973 oil crisis). See below for
reference:US Department of the State. Office of the Historian. Oil Embargo 1973-74. Retrieved May 5, 2014, fromhttp://history.state.gov/milestones/1969-1976/oil-embargoASSIGNMENT EXPECTATIONS:Please be sure to cite all sources within the text and provide a reference list at the end of the paper.Length: 4-5 pages, double-spaced and typed.The following items will be assessed in particular:Your ability to understand an application of demand and supply.Some in-text references to the modular background material (APA formatting not required).The
essay should address each element of the assignment. Remember to
support your answers with solid references including the Case readings.

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