Oil prices rose slightly Monday, gaining after further hints that OPEC may cut production if global supplies continue to rise.So consumers expect that in the future there will be a supply shift to the left. Why then did prices rise today? Work it out yourself, then compare your answer to the one I provide in the comments.
Monday, February 18, 2008
Market Equilibrium: Future Supply Cuts Increase Today's Oil Price
From CNN.COM:
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1 comment:
If in the future, supply shifts to the left, then prices will rise at that time. This translates into an increase in the expected future price of oil, which is a Demand shift to the right. This causes both prices to rise and output to increase as well.
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