a) Draw a supply and demand graph for crude oil. Label the equilibrium P and Q. Show the consumer and producer surplus.

b) Draw a new supply and demand graph showing the original equilibrium and what happens if major new oil reserves are discovered increasing the production of oil. Label the old and new equilibrium P and Q.

c) Draw a new supply and demand graph showing what happens when world economies strengthen so that buyers need more oil.

d) If both b) and c) happened at the same time what could you say about equilibrium P and Q?

e) Draw a new supply and demand graph showing what happens in the market for fuel efficient cars if only part c) has occurred. Label both old and new equilibrium P and Q.