Suppose there are claims that a new war in the Persian Gulf could shift the world supply curve to the left, causing the world price of oil to soar regardless of whether we drill in ANWR. How accurate is this claim? Use the same type of analysis as in the text solved problem to calculate how much a shock would cause the price to rise without and with the ANWR production
According to the solved problem, demand is initially
Q= 117.50-0.47p
and supply is initially
Q=70.50 +0.47p
(without negative oil shocks and ANWR oil production).
Now incorporate a negative oil shock of 6 million barrels a day (shifting the supply curve for oil to the left by that amount). Without the ANWR production, price rises by $6.38 por barrel. (Enter a numeric response using a real number rounded to two decimal places)
With ANWR production of 0.8 million barrels of oil per day (and the negative oil shock), price rises by $55 per barrel. (Enter a numeric response using a real number rounded to two decimal places)