3. Understanding changes in equilibrium price and quantity Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do so, you must consider factors that can affect the supply of and demand for heating oil. Determinants of the demand for heating oil include household income, the price of an oil furnace (a complementary good for heating oil), and the price of natural gas (a substitute good for heating oil). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining crude oil into home heating oil. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. (Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.) Graph Input Tool (? ) Market for Heating Oil Market for Heating Oil Price of Heating oil ( Dollars per barrel) 30 70 Supply Quantity Demanded 100 Quantity Supplied Thousands of barrels Thousands of barrels 60 per day) per day) 50 Demand Shifters Supply Shifters 40 PRICE (Dollars per barrel) 30 Price of Natural Gas 10 Cost of Crude Oil 25 'Dollars per 1,000 (Per barrel of heating 20 Demand cubic ft.) Di) Price of an Oil Cost of Refining Oil 10 Furnace 2000 15 Per barrel of heating (Dollars per furnace) Di) 0 Average Annual 40 20 40 60 80 100 120 140 160 Income (Thousands of QUANTITY (Thousands of barrels per day) dollars