market for european crude oil\nprice\nquantity\nbreaking news\na large container ship is wedged in the suez…
market for european crude oil\nprice\nquantity\nbreaking news\na large container ship is wedged in the suez canal, forcing other container ships to reroute and sail around africa, adding 15 days to their journey.\nconsider the market for european crude oil, commonly shipped via the suez canal. what happens?
Answer
Explanation:
Step1: Analyze supply - chain disruption
The Suez Canal blockage affects the supply of European crude oil. Shipping time increases, which means higher costs for suppliers.
Step2: Determine supply - side shift
Higher costs for suppliers lead to a decrease in supply. In a supply - demand graph, the supply curve (S) shifts to the left.
Step3: Analyze new equilibrium
With a left - shifted supply curve and a constant demand curve (D), the equilibrium price increases and the equilibrium quantity decreases.
Answer:
The equilibrium price of European crude oil increases and the equilibrium quantity decreases.