The average people in a country use about 20 barrels of oil each year in a country. And the usage

of this commodity is not avoidable. This is one of the important parts of our expenditure, and this

is the commodity where the price will change quite often.

Years before, around 2010 there were a long period of high prices. And this affects the largest

part of this sector, production stopped because of the hike in prices and the demand side got the

final effect. To manage this situation, the government provides funds for research, to identify the

source of reducing the production cost so as to fix low price.

The period of high prices affects the oil industry a lot and they decided to increase the supply.

Questions:

1. Identify the central economic problems of an economy relating to this situationand

derive your own conclusion

2. When a seller is forced to sell below the "reserve price", Comment this with the reality

in the supply market