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Homework (Ch 04) Market for Heating Oil 80 I Price of Heating oil 70 (Dollars per barrel) - Quanti Quantity Supplied 2 60 Deman ed 100 (Thousands of 60 g (Thousands of barrels per day) 3 barrels per day) \\ 50 (D D. m g 40 Demand Shifters Supply Shifters g 30 Lu Price of Natural 10 Cost of Crude Oil 25 9 Gas ( Per barrel of E 20 (Dollars per 1,000 heating oil) cubic ft.) 10 Price of an Oil 2000 Cost of Rening Oil 15 Furnace 7 (Per barrel of 7 0 (Dollars per furnace) heating oil) 0 20 40 60 80 100 120 140 160 Average Annual 40 QUANTITY (Thousands of barrels per day) Income ( Thousands of dollars) Initially, the price of natural gas is $10 per 1,000 cubic feet, the price of an oil furnace is $2,000, the average annual household income is $40,000, the cost of crude oil is $25 per barrel of heating oil, and the cost of refining oil is $15 per barrel of heating oil. The equilibrium quantity in this market is E thousand barrels of heating oil per day, and the equilibrium price is per barrel. Suppose that the cost of crude oil decreases from $25 to $20 for each barrel of heating oil produced. Assuming that the rest of the determinants of supply and demand for heating oil remain equal to their initial values, the market will eventually reach a new equilibrium price of $ per barrel