Future Supply and Demand for Crude Oil To complete this project st Price per barrel Daily US demand for crude oil (in millions of barrels per day) Daily US supply of crude oil (in millions of barrels per day) $30 00 1 0 7 $35 00 0 9 $40 00 0 8 0 9 $45 00 0 7 1 $50 00 0 6 1 1 $55 00 0 5 1 2 $60 00 0 4 1 3 1 Based on the informatio in the space below This inf barrel and the supply and d price and quantity and pric for profit maximization 2 The global demand for o For the past several years, the can observe this change grap Support your statements with 0 8 3 What are potential supp 4 Is the global oil and gas m references Be as descriptive as possib Data from https www iea org Show your work below Question 1 Oil Supply and Demand $70 00 $60 00 $50 00 $40 00 $30 00 $20 00 $10 00 $0 00 0 2 0 4 0 6 0 8 1 1 2 Daily US demand for crude oil (in millions of barrels per day) Daily US supply of crude oil (in millions of barrels per day) Equilibrium Question 2 1 4 Question 3 Question 4 To complete this project step, address the following 1 Based on the information provided from the International Energy Agency (IEA) in the table on the left, examine the sup in the space below This information is helpful for our client ExxonMobil to know how much oil to produce The graph sho barrel and the supply and demand for the number of barrels in the united States per day After you have examined the gr price and quantity and price at which equilibrium exists This information is important for the client to determine the qua for profit maximization 2 The global demand for oil changes with the changes in global economies As economic activity increases, the global de For the past several years, the global demand for oil has increased (https www iea org oilmarketreport omrpublic ) As the global can observe this change graphically What changes are expected in the short term To answer this question, please see https www Support your statements with research and references 3 What are potential supply and demand risks in the global oil market Support your statements with research and refer 4 Is the global oil and gas market in a monopoly, oligopoly, or competitive economic model Why Support your statement references Be as descriptive as possible and credit any sources you use 1 2 r day) ay) 1 4 he table on the left, examine the supply and demand graph w much oil to produce The graph shows crude oil prices per day After you have examined the graph below, identify the t for the client to determine the quantity of oil to produce omic activity increases, the global demand for oil increases marketreport omrpublic ) As the global demand changes, we r this question, please see https www eia gov outlooks steo statements with research and references model Why Support your statements with research and Cal Overhaut operates an ExxonMobil gas station franchise in Fitzhugh, MD The price of gasoline is volatile and varies greatly from day to day The price per gallon varies based on the seasonal blend of gasoline, which is determined by clean air requirements Cal's pricing options are based on the desired profit margin Conventional Gasoline Regular Spot Prices can be found at https www eia gov dnav pet hist EER EPMRU PF4 Y35NY DPGD htm Cal recently raised the price of regular gas by 10 cent per gallon from $2 658 to $2 758, and his revenue decreased and profit increased Cal would like you to explain why that happened Cal competes with another gas station across the street that typically sells regular gas for 2 to 3 cents per gallon less than his station They are currently selling gasoline for $2 458 per gallon Recently, regular gasoline for delivery in New York harbor sold for $1 517 per gallon Cal tells you that his gas station has fixed operating costs of about $438 per day To the right are the components that determine the cost of a gallon of regular gasoline to Cal's business Answer the seven questions below You are required to use Excel for all calculations 1 Last week, Cal sold an average of 4,000 gallons per day at an average price of $2 658 per gallon This week, he raised the average price to $2 758 per gallon His station is now selling an average of 3,600 gallons per day Fixed costs of operating the gas station are $438 per day What is the price elasticity of demand Can the demand be characterized as price elastic, price inelastic, or neither By how much did revenues increase or decrease as a result of the change in price By how much did profits increase or decline (Profit is revenue minus total cost ) 2 After seeing your analysis, Cal decides to lower the price of gas from $2 758 to $2 558 per gallon After this change, the volume sold increased to 4,400 gallons per day He asks you to measure his business gains or losses as a result of this price change Fixed costs are $438 per day What is the price elasticity of demand Can the demand be characterized as price elastic, price inelastic, or neither By how much did revenues increase or decrease as a result of the change in price By how much did profits increase or decline (Profit is revenue minus total cost ) this change, the volume sold increased to 4,400 gallons per day He asks you to measure his business gains or losses as a result of this price change Fixed costs are $438 per day What is the price elasticity of demand Can the demand be characterized as price elastic, price inelastic, or neither By how much did revenues increase or decrease as a result of the change in price By how much did profits increase or decline (Profit is revenue minus total cost ) 3 After seeing the result (from question 2), Cal decides to lower his price once again from $2 558 to $2 458 per gallon Once again, volume sold increases and settles at 4,800 gallons per day He is worried that any further price cut will cause the discount station across the street to also lower it price What is the price elasticity of demand Can the demand be characterized as price elastic, price inelastic, or neither By how much did revenues increase or decrease as a result of the change in price By how much did profits increase or decline (Profit is revenue minus total cost ) 4 Cal's son is studying in the MBA program at UMUC He tells his father that profit maximization occurs when marginal cost (MC) marginal revenue (MR) Cal understands that his marginal cost is the same as his variable cost, or $2 158 per gallon Technically, marginal cost is the added cost from selling one more gallon Cal asks you for a chart to show how profits vary with sales volume, assuming that he sells an additional 400 gallons for each 10 cent decrease in price Also, he wants to know by how much he can lower his price without losing money Given that you know the price and quantity of gallons sold so far, and that Cal's cost per gallon is $2 158 per gallon and his fixed cost is $438 per day, complete the table to the right 5 Once you calculate total profit, what is the profit maximizing price 6 Next calculate marginal revenue, knowing that it is the difference between the revenue at the price shown and the revenue at 1 400 of a cent less Calculate 1 400 of a cent as well as the new price Calculate the marginal cost of selling zero point one (0 1) more gallon at each price Prove that MC $0 2158 Complete the table to the right 7 What advice can you give to Cal on setting prices to maximize profit 7 What advice can you give to Cal on setting prices to maximize profit Select One Price Elastic Price Inelastic Unit Price Elastic Profit Maximization gasoline is volatile nd of gasoline, esired profit margin Base price of unleaded regular delivered in New York harbor (January 27, 2020) and his revenue Added cost to Cal Maryland state gasoline tax (Effective July 1, 2018) Federal gasoline tax Distribution Delivery Advertising and Marketing to ExxonMobil Additives Total additions r 2 to 3 cents per ently, regular Total cost per gallon o Cal's business per gallon This rage of 3,600 gallons Answer question 1 below Quantity Price 4000 2 658 3600 2 758 Average Average change change Elasticity of Demand Elasticity By how much did revenues increase or decrease as a result of the change in price By how much did profits increase or decline Gallons sold per day 4000 3600 per gallon After his business gains Price $ Revenue (price x gallons) Cost per Gallon 2 658 $ Answer question 2 below Quantity Price 3600 2 758 4400 2 558 Average Average 10,632 00 $ Variable Cost (cost per unit x volume) 2 158 $ 8,632 00 his business gains om $2 558 to $2 458 worried that any ximization occurs ost is the same as selling one more ells an additional e can lower his price r gallon is $2 158 change change Elasticity of Demand Elasticity By how much did revenues increase or decrease as a result of the change in price By how much did profits increase or decline Gallons sold per day Price Revenue (price x gallons) Cost per Gallon Variable Cost (cost per unit x volume) 3600 4400 Answer question 3 below Quantity Price 4400 2 558 4800 2 458 Average Average change change Elasticity of Demand Elasticity By how much did revenues increase or decrease as a result of the change in price By how much did profits increase or decline Gallons sold per day Price Revenue (price x gallons) Cost per Gallon Variable Cost (cost per unit x volume) 4400 4800 Profit Maximization Gallons sold per day 2400 2800 3000 3200 3600 4000 4400 4800 5200 Price $ $ $ $ $ $ $ $ $ Revenue (price x gallons) Cost per Gallon 3 058 $ 2 958 2 908 2 858 2 758 2 658 2 558 2 458 2 358 7,339 20 $ Variable Cost (cost per unit x volume) 2 158 $ 5,179 20 nue at the price new price ove that MC 5600 6000 6400 6800 7200 7600 8000 8400 8800 9200 $ $ $ $ $ $ $ $ $ $ 2 258 2 158 2 058 1 958 1 858 1 758 1 658 1 558 1 458 1 358 Answer question 5 below Marginal Revenue Gallons sold per day Price 2800 0 2800 1 $ $ 2 958000 2 957975 3000 0 3000 1 $ $ 2 908000 2 907975 3200 0 3200 1 3600 0 3600 1 4000 0 4000 1 4400 0 4400 1 4800 0 4800 1 5200 0 5200 1 5600 0 5600 1 Revenue (price x gallons) Marginal revenue Cost per gallon $8,282 40 $8,282 63 $0 2258 $2 158 $2 158 $1 517 $0 353 $0 184 $0 042 $0 042 $0 020 $0 641 $2 158 Fixed cost per Total Cost (Fixed day Variable) $ 438 00 $ 9,070 00 $ Daily Profit (revenue all costs) 1,562 00 Fixed cost per Total Cost (Fixed day Variable) Daily Profit (revenue all costs) Fixed cost per Total Cost (Fixed day Variable) Daily Profit (revenue all costs) Fixed cost per Total Cost (Fixed day Variable) Daily Profit (revenue all costs) on $ 438 00 $ 5,617 20 $ 1,722 00 Marginal Cost Variable Cost Fixed Cost Total Cost Marginal Cost $6,042 40 $6,042 62 $438 00 $438 00 $6,480 40 $6,480 62 $0 2158

Question

Future Supply and Demand for Crude Oil To complete this project st Price per barrel Daily US demand for crude oil (in millions of barrels per day) Daily US supply of crude oil (in millions of barrels per day) $30 00 1 0 7 $35 00 0 9 $40 00 0 8 0 9 $45 00 0 7 1 $50 00 0 6 1 1 $55 00 0 5 1 2 $60 00 0 4 1 3 1  Based on the informatio in the space below  This inf barrel and the supply and d price and quantity and pric for profit maximization  2  The global demand for o For the past several years, the can observe this change grap Support your statements with 0 8 3  What are potential supp 4  Is the global oil and gas m references  Be as descriptive as possib Data from https   www iea org Show your work below  Question 1  Oil Supply and Demand $70 00 $60 00 $50 00 $40 00 $30 00 $20 00 $10 00 $0 00 0 2 0 4 0 6 0 8 1 1 2 Daily US demand for crude oil (in millions of barrels per day) Daily US supply of crude oil (in millions of barrels per day) Equilibrium  Question 2 1 4 Question 3 Question 4 To complete this project step, address the following  1  Based on the information provided from the International Energy Agency (IEA) in the table on the left, examine the sup in the space below  This information is helpful for our client ExxonMobil to know how much oil to produce  The graph sho barrel and the supply and demand for the number of barrels in the united States per day  After you have examined the gr price and quantity and price at which equilibrium exists  This information is important for the client to determine the qua for profit maximization  2  The global demand for oil changes with the changes in global economies  As economic activity increases, the global de For the past several years, the global demand for oil has increased (https   www iea org oilmarketreport omrpublic )  As the global can observe this change graphically  What changes are expected in the short term  To answer this question, please see https   www Support your statements with research and references  3  What are potential supply and demand risks in the global oil market  Support your statements with research and refer 4  Is the global oil and gas market in a monopoly, oligopoly, or competitive economic model  Why  Support your statement references  Be as descriptive as possible and credit any sources you use  1 2 r day) ay) 1 4 he table on the left, examine the supply and demand graph w much oil to produce  The graph shows crude oil prices per day  After you have examined the graph below, identify the t for the client to determine the quantity of oil to produce omic activity increases, the global demand for oil increases  marketreport omrpublic )  As the global demand changes, we r this question, please see https   www eia gov outlooks steo   statements with research and references  model  Why  Support your statements with research and Cal Overhaut operates an ExxonMobil gas station franchise in Fitzhugh, MD  The price of gasoline is volatile and varies greatly from day to day  The price per gallon varies based on the seasonal blend of gasoline, which is determined by clean air requirements  Cal's pricing options are based on the desired profit margin  Conventional Gasoline Regular Spot Prices can be found at https   www eia gov dnav pet hist EER EPMRU PF4 Y35NY DPGD htm  Cal recently raised the price of regular gas by 10 cent per gallon from $2 658 to $2 758, and his revenue decreased and profit increased  Cal would like you to explain why that happened  Cal competes with another gas station across the street that typically sells regular gas for 2 to 3 cents per gallon less than his station  They are currently selling gasoline for $2 458 per gallon  Recently, regular gasoline for delivery in New York harbor sold for $1 517 per gallon  Cal tells you that his gas station has fixed operating costs of about $438 per day  To the right are the components that determine the cost of a gallon of regular gasoline to Cal's business  Answer the seven questions below  You are required to use Excel for all calculations  1  Last week, Cal sold an average of 4,000 gallons per day at an average price of $2 658 per gallon  This week, he raised the average price to $2 758 per gallon  His station is now selling an average of 3,600 gallons per day  Fixed costs of operating the gas station are $438 per day  What is the price elasticity of demand  Can the demand be characterized as price elastic, price inelastic, or neither  By how much did revenues increase or decrease as a result of the change in price  By how much did profits increase or decline  (Profit is revenue minus total cost ) 2  After seeing your analysis, Cal decides to lower the price of gas from $2 758 to $2 558 per gallon  After this change, the volume sold increased to 4,400 gallons per day  He asks you to measure his business gains or losses as a result of this price change  Fixed costs are $438 per day  What is the price elasticity of demand  Can the demand be characterized as price elastic, price inelastic, or neither  By how much did revenues increase or decrease as a result of the change in price  By how much did profits increase or decline  (Profit is revenue minus total cost ) this change, the volume sold increased to 4,400 gallons per day  He asks you to measure his business gains or losses as a result of this price change  Fixed costs are $438 per day  What is the price elasticity of demand  Can the demand be characterized as price elastic, price inelastic, or neither  By how much did revenues increase or decrease as a result of the change in price  By how much did profits increase or decline  (Profit is revenue minus total cost ) 3  After seeing the result (from question 2), Cal decides to lower his price once again from $2 558 to $2 458 per gallon  Once again, volume sold increases and settles at 4,800 gallons per day  He is worried that any further price cut will cause the discount station across the street to also lower it price  What is the price elasticity of demand  Can the demand be characterized as price elastic, price inelastic, or neither  By how much did revenues increase or decrease as a result of the change in price  By how much did profits increase or decline  (Profit is revenue minus total cost ) 4  Cal's son is studying in the MBA program at UMUC  He tells his father that profit maximization occurs when marginal cost (MC)   marginal revenue (MR)  Cal understands that his marginal cost is the same as his variable cost, or $2 158 per gallon  Technically, marginal cost is the added cost from selling one more gallon  Cal asks you for a chart to show how profits vary with sales volume, assuming that he sells an additional 400 gallons for each 10 cent decrease in price  Also, he wants to know by how much he can lower his price without losing money  Given that you know the price and quantity of gallons sold so far, and that Cal's cost per gallon is $2 158 per gallon and his fixed cost is $438 per day, complete the table to the right  5  Once you calculate total profit, what is the profit maximizing price  6  Next calculate marginal revenue, knowing that it is the difference between the revenue at the price shown and the revenue at 1 400 of a cent less  Calculate 1 400 of a cent as well as the new price  Calculate the marginal cost of selling zero point one (0 1) more gallon at each price  Prove that MC   $0 2158 Complete the table to the right  7  What advice can you give to Cal on setting prices to maximize profit  7  What advice can you give to Cal on setting prices to maximize profit  Select One Price Elastic Price Inelastic Unit Price Elastic Profit Maximization gasoline is volatile nd of gasoline, esired profit margin  Base price of unleaded regular delivered in New York harbor (January 27, 2020) and his revenue Added cost to Cal  Maryland state gasoline tax (Effective July 1, 2018) Federal gasoline tax Distribution   Delivery Advertising and Marketing to ExxonMobil Additives Total additions r 2 to 3 cents per ently, regular Total cost per gallon o Cal's business  per gallon  This rage of 3,600 gallons Answer question 1 below  Quantity Price 4000 2 658 3600 2 758 Average Average   change   change Elasticity of Demand Elasticity  By how much did revenues increase or decrease as a result of the change in price  By how much did profits increase or decline  Gallons sold per day 4000 3600 per gallon  After his business gains Price $ Revenue (price x gallons) Cost per Gallon 2 658 $ Answer question 2 below  Quantity Price 3600 2 758 4400 2 558 Average Average 10,632 00 $ Variable Cost (cost per unit x volume) 2 158 $ 8,632 00 his business gains om $2 558 to $2 458 worried that any ximization occurs ost is the same as selling one more ells an additional e can lower his price r gallon is $2 158   change   change Elasticity of Demand Elasticity  By how much did revenues increase or decrease as a result of the change in price  By how much did profits increase or decline  Gallons sold per day Price Revenue (price x gallons) Cost per Gallon Variable Cost (cost per unit x volume) 3600 4400 Answer question 3 below  Quantity Price 4400 2 558 4800 2 458 Average Average   change   change Elasticity of Demand Elasticity  By how much did revenues increase or decrease as a result of the change in price  By how much did profits increase or decline  Gallons sold per day Price Revenue (price x gallons) Cost per Gallon Variable Cost (cost per unit x volume) 4400 4800 Profit Maximization Gallons sold per day 2400 2800 3000 3200 3600 4000 4400 4800 5200 Price $ $ $ $ $ $ $ $ $ Revenue (price x gallons) Cost per Gallon 3 058 $ 2 958 2 908 2 858 2 758 2 658 2 558 2 458 2 358 7,339 20 $ Variable Cost (cost per unit x volume) 2 158 $ 5,179 20 nue at the price new price  ove that MC   5600 6000 6400 6800 7200 7600 8000 8400 8800 9200 $ $ $ $ $ $ $ $ $ $ 2 258 2 158 2 058 1 958 1 858 1 758 1 658 1 558 1 458 1 358 Answer question 5 below  Marginal Revenue Gallons sold per day Price 2800 0 2800 1 $ $ 2 958000 2 957975 3000 0 3000 1 $ $ 2 908000 2 907975 3200 0 3200 1 3600 0 3600 1 4000 0 4000 1 4400 0 4400 1 4800 0 4800 1 5200 0 5200 1 5600 0 5600 1 Revenue (price x gallons) Marginal revenue Cost per gallon $8,282 40 $8,282 63 $0 2258 $2 158 $2 158 $1 517 $0 353 $0 184 $0 042 $0 042 $0 020 $0 641 $2 158 Fixed cost per Total Cost (Fixed day   Variable) $ 438 00 $ 9,070 00 $ Daily Profit (revenue   all costs) 1,562 00 Fixed cost per Total Cost (Fixed day   Variable) Daily Profit (revenue   all costs) Fixed cost per Total Cost (Fixed day   Variable) Daily Profit (revenue   all costs) Fixed cost per Total Cost (Fixed day   Variable) Daily Profit (revenue   all costs) on $ 438 00 $ 5,617 20 $ 1,722 00 Marginal Cost Variable Cost Fixed Cost Total Cost Marginal Cost $6,042 40 $6,042 62 $438 00 $438 00 $6,480 40 $6,480 62 $0 2158

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Future Supply and Demand for Crude Oil To complete this project st Price per barrel Daily US demand for crude oil (in millions of barrels

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