Choose the correct answer
1 Oil is nicknamed
a) black gold b) sticky gold c) dark silver
2 Greenback is the name of
a) ex-chairman of the US Federal Reserve Board
b) the US currency
c) a Nobel laureate
3 A subsidy is
a) money given to support a business
b) money given to make petrol more expensive
c) a law in economics about prices
4 An ecotax is
a) a tax to pay economists' salaries
b) a tax to make polluting industries more expensive
c) a tax to economise on petrol prices
5 Opec is a group of
a) six countries in the Persian Gulf
b) 10 Arab countries
c) 13 countries in Africa, Middle East, Asia and South America
Supply and demand
Supply and demand is a fundamental law in economics. In perfect markets, the higher the price, the more producers are ready to make products, as they can make more profit.
On the other hand, the higher the price, fewer consumers are willing to buy the product, as they consider it too expensive. Quantities bought and sold, and their prices go up and down until they reach a balance.
But many markets are not perfect and there can be delays in adjusting production, consumption and prices. Other factors can impact prices such as the numbers of producers and consumers and whether a government changes prices. In the case of oil, governments in many countries subsidise it. This means the government pays to keep prices down. Some governments tax fuel in order to reduce consumption and pollution.
Here are a few activities you can research on this week's topic:
1 Find out the various usages of fuel in your daily life: which products can be impacted by the rise in crude oil prices? What percentage do these products make up of your family expenses?
2 Investigate the impact of the 1970s oil crises.
3 Find out which countries belong to Opec. Which other oil-producing countries are not Opec members? Which countries are the biggest oil consumers?
1. a, 2. b, 3. a, 4. b, 5. c