and demand diagram. Create a sketch of the diagram if necessary.

a. Cars are becoming more fuel efficient, and therefore get more miles to the gallon.

b. The winter is exceptionally cold.

c. A major discovery of new oil is made off the coast of Norway.

d. The economies of some major oil-using nations, like Japan, slow down.

e. A war in the Middle East disrupts oil-pumping schedules.

f. Landlords install additional insulation in buildings.

g. The price of solar energy falls dramatically.

h. Chemical companies invent a new, popular kind of plastic made from oil.

5. Let’s think about the market for air travel. From August 2014 to January 2015, the price of jet fuel

increased roughly 47%. Using the four-step analysis, how do you think this fuel price increase affected the

equilibrium price and quantity of air travel?

6. A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen
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