This is related to microeconomics. Using the supply and demand diagram:

a. Illustrate what happens when economic growth boosts world demand (i) in the short run, (i) in the long run as producers invest in new oil wells, (iii) in the long run as consumers find substitutes for oil.

b. Similarly. describe the short and long-run consequences of a negative supply shock similar to the 1970s shock.

c. If you observed an oil price rise. how in could you tell whether it was driven by supply-side or demand-side developments (quantity consumed)? Draw a diagram for each scenario.

d. How does a cartel like OPEC inflate prices above the equilibrium level? Why would individual OPEC member countries have an incentive to produce more than the quota assigned to them?