BellringBellringerer1.1. Identify 2 goods Identify 2 goods

you buy that you buy that have elastic have elastic

demand curvesdemand curves

2.2. Identify 2 goods Identify 2 goods you buy that you buy that

have inelastic have inelastic demand curvesdemand curves

3.3. What might What might change the change the

demand curve demand curve for oil? for oil?

(Remember (Remember TRIBE)TRIBE)

Changes to supplyChanges to supply

Changes in Changes in inputsinputs Labor, raw Labor, raw

materials, materials, gas pricesgas prices

TechnologyTechnology Producer Producer

ExpectationsExpectations

S – strike

$

Q

SS faster computers

OIL!!!OIL!!!

Oil DrillingOil Drilling

Crude oil from Crude oil from groundground

Sent to Sent to refineryrefinery

Uses of Uses of OilOil

Uses of Uses of oiloil

2011 Oil 2011 Oil Consumption Consumption Rankings (Source: Rankings (Source: CIA FACTBOOK) CIA FACTBOOK) Amount  (top to Amount  (top to bottom)  bottom)     

#1  #1  United StatesUnited States::19,150,000 bbl/day 19,150,000 bbl/day  #2  :  #2  : European UnionEuropean Union13,680,000 bbl/day  13,680,000 bbl/day  #3  #3  ChinaChina::9,400,000 bbl/day  9,400,000 bbl/day  #4 #4 JapanJapan::4,452,000 bbl/day  4,452,000 bbl/day  #5  #5  IndiaIndia::3,182,000 bbl/day3,182,000 bbl/day

solve this problem?solve this problem? Low supply of oil, high demandLow supply of oil, high demand What to do? Substitutes?What to do? Substitutes? 12 minutes in groups12 minutes in groups

Corn!Corn! US government US government

provides provides incentives to incentives to grow corn for fuelgrow corn for fuel

Recent regulation Recent regulation has caused Price has caused Price corn to increase corn to increase since 2000since 2000

If you were a If you were a farmer, what farmer, what would you do?would you do?