week 4 Please Pleas help DISCUSSION QUESTION WEEK 4. Now it\'s your turn to appl
ID: 1130344 • Letter: W
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week 4
Please Pleas help
DISCUSSION QUESTION WEEK 4. Now it's your turn to apply the concepts learned. How is the oil market likely to respond to a 'glut' of crude oil? A May 18, 2015 news article from the Wall Street Journal about the oil market stated, "The global glut of crude that has hit oil prices is starting to shrink." 1. What does the article mean by a "glut"? What does a glut imply about the quantity demanded of oil relative to the quantity supplied? 2. What would be the effect of the glut on oil prices? 3. Briefly explain what would make the glut start to shrink.Explanation / Answer
1) The glut in the economic term can be defined as an excess supply of any commodity or product in the market in relation to the demand for that particular product. A Glut in the oil market means keeping the demand for oil in the mind the production of oil has increased and that is causing excess supply.
2) A glut in the oil market will drag the price of oil down. In this case, there is excess supply and limited demand which will bring the price of the oil down.
3) A production cut or restricting the supply of oil will make the glut to shrink. As the glut is mainly because of overproduction any decrease in the production of oil will be important to shrink the glut in the oil market.
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