quantity, as in (a), with more inelastic demand, or in a new equilibrium with only a small increase in price and a

relatively larger reduction in quantity, as in (b), with more elastic demand.

Figure 5.11 (a) shows inelastic demand for oil in the short run similar to that which existed for the United
States in 1973. In Figure 5.11 (a), the new equilibrium (E1) occurs at a price of $25 per barrel, roughly double
the price before the OPEC shock, and an equilibrium quantity of 16 million barrels per day. Figure 5.11 (b)

shows what the outcome would have been if the U.S. demand for oil had been more elastic, a result more likely
over the long term. This alternative equilibrium (E1) would have resulted in a smaller price increase to $14 per
barrel and larger reduction in equilibrium quantity to 13 million barrels per day. In 1983, for example, U.S.

petroleum consumption was 15.3 million barrels a day, which was lower than in 1973 or 1975. U.S. petroleum
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