... not high either. The price has nearly tripled in the last decade this is because the demand has increased so the price has also increased. From figure 1 it shows that when the price on oil is increasing the goods and services become expensive and economies experience inflation. The price on crude oil rose throughout 2004 and 2005, as the global oil demand increased dramatically. Using the supply and demand framework, explain the main factors that may account for the price changes shown by your data. I will now define supply and demand model and elasticity and relate it to the oil market. Supply and demand The theory of supply and demand is one of the essential theories of economics. Supply is the amount of product that a producer is willing and able to pay at a particular price, whereas demand is the amount of product that a buyer is willing and ...

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