the demand for gasoline and thus oil. Since the demand curve is shifting down the supply curve, the

equilibrium price and quantity both fall.

b) Cold weather increases the need for heating oil. This causes a rightward shift in the demand for

heating oil and thus oil. Since the demand curve is shifting up the supply curve, the equilibrium

price and quantity both rise.

c) A discovery of new oil will make oil more abundant. This can be shown as a rightward shift in the

supply curve, which will cause a decrease in the equilibrium price along with an increase in the

equilibrium quantity. (The supply curve shifts down the demand curve so price and quantity follow the

law of demand. If price goes down, then the quantity goes up.)

d) When an economy slows down, it produces less output and demands less input, including energy, which

is used in the production of virtually everything. A decrease in demand for energy will be reflected

as a decrease in the demand for oil, or a leftward shift in demand for oil. Since the demand curve is

shifting down the supply curve, both the equilibrium price and quantity of oil will fall.

e) Disruption of oil pumping will reduce the supply of oil. This leftward shift in the supply curve

will show a movement up the demand curve, resulting in an increase in the equilibrium price of oil

and a decrease in the equilibrium quantity.

f) Increased insulation will decrease the demand for heating. This leftward shift in the demand for

oil causes a movement down the supply curve, resulting in a decrease in the equilibrium price and

quantity of oil.

g) Solar energy is a substitute for oil-based energy. So if solar energy becomes cheaper, the demand

for oil will decrease as consumers switch from oil to solar. The decrease in demand for oil will be

shown as a leftward shift in the demand curve. As the demand curve shifts down the supply curve, both

equilibrium price and quantity for oil will fall.

h) A new, popular kind of plastic will increase the demand for oil. The increase in demand will be

shown as a rightward shift in demand, raising the equilibrium price and quantity of oil.