How hike in oil prices affected world market?

- hike in oil prices, meaning price for oil has increased


- demand will decrease due to income effect and substitution effect (meaning that consumers will not buy oil as often)


- leftward shift of demand curve


- there will be a surplus of oil, ie. extra supply


- downward pressure on prices of oil


- subsequently demand will increase again


- but the new demand level is lower than before


- however, using elasticities of demand, oil has an inelastic demand


- due to lack of substitutes and is considered as a necessity


- thus fall in demand is very minimal


- as most people cannot do without oil





Therefore, CONCLUSION:


demand for oil will fall, but not so much.How hike in oil prices affected world market?
the higher the Oil price means





higher food prices


higher transportation cost


higher airline tickets





everything is affected by the price of OILHow hike in oil prices affected world market?
transportation costs is directly proportional to oil price. so the cost of transportation increases resulting increase in price of everything
every thing goes up in price

soft lips