Market for Oil: Understanding Domestic Demand in the United States
What is the relationship between the world price of oil and the domestic demand in the United States?
When the world price of oil is $20 per barrel, the United States demands how many thousand barrels of oil?
When the world price of oil is $12 per barrel, the United States demands how many thousand barrels of oil?
Understanding the Relationship:
When the world price of oil is $20 per barrel, the United States demands 120 thousand barrels of oil.
When the world price of oil is $12 per barrel, the United States demands 140 thousand barrels of oil.
When the world price of oil is $20 per barrel, it means that oil is being traded globally at that price. At this price, the domestic demand for oil in the United States is 120 thousand barrels. This indicates that at $20 per barrel, the United States is willing to purchase and consume 120 thousand barrels of oil.
On the other hand, when the world price of oil decreases to $12 per barrel, it implies that oil is available at a lower price globally. At this lower price, the domestic demand for oil in the United States increases to 140 thousand barrels. This means that the United States is willing to purchase and consume 140 thousand barrels of oil when the price per barrel is $12.
The relationship between the world price of oil and the domestic demand in the United States demonstrates how changes in price influence the quantity of oil demanded domestically. As the price decreases, the quantity demanded tends to increase, reflecting a higher level of consumer interest in purchasing oil at a lower cost.