[Script Info]
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[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:12.63,0:00:17.01,Default,,0000,0000,0000,,- Now that we've got the demand curve\Ndown, let's move on to the supply curve.
Dialogue: 0,0:00:17.49,0:00:22.12,Default,,0000,0000,0000,,A supply curve shows how much of a good\Nsuppliers are willing and able to supply
Dialogue: 0,0:00:22.30,0:00:25.94,Default,,0000,0000,0000,,at different prices. As with the demand\Ncurve, there's a supply curve for every
Dialogue: 0,0:00:26.12,0:00:30.73,Default,,0000,0000,0000,,good and service. And again the ideas are\Nthe same so let's look at the supply curve
Dialogue: 0,0:00:30.91,0:00:35.55,Default,,0000,0000,0000,,for oil. We see an intuitive relationship\Nbetween price and the quantity supplied.
Dialogue: 0,0:00:35.73,0:00:39.61,Default,,0000,0000,0000,,As the price goes up, the quantity of oil\Nthat companies are willing to supply
Dialogue: 0,0:00:39.79,0:00:45.37,Default,,0000,0000,0000,,increases. In this example, in a low\Nprice, $5 per barrel, let's say 10 million
Dialogue: 0,0:00:45.55,0:00:50.54,Default,,0000,0000,0000,,barrels of oil are supplied per day. At\N$20 per barrel, 25 million barrels are
Dialogue: 0,0:00:50.72,0:00:55.53,Default,,0000,0000,0000,,supplied, and at $55 per barrel, 50\Nmillion barrels are supplied. So in
Dialogue: 0,0:00:55.71,0:01:02.10,Default,,0000,0000,0000,,general, a higher price means a greater\Nquantity supplied. Let's go deeper and see
Dialogue: 0,0:01:02.28,0:01:07.61,Default,,0000,0000,0000,,why. Oil exists all over the world but\Nit's not equally easy to extract. In some
Dialogue: 0,0:01:07.79,0:01:11.66,Default,,0000,0000,0000,,places like Saudi Arabia, it's really easy\Nto get oil out of the ground. It's costs
Dialogue: 0,0:01:11.84,0:01:16.56,Default,,0000,0000,0000,,about $2 a barrel to extract. Oil in the\NU. S.like from Alaska is a lot deeper and
Dialogue: 0,0:01:16.74,0:01:22.06,Default,,0000,0000,0000,,getting out cost more, at least $10 per\Nbarrel. And producing oil from an oil rig
Dialogue: 0,0:01:22.24,0:01:26.45,Default,,0000,0000,0000,,like the Atlantis rig in the Gulf Coast is\Neven more expensive. That rig has to
Dialogue: 0,0:01:26.63,0:01:31.57,Default,,0000,0000,0000,,descend more than a mile underwater before\Ndrilling even begins. When oil prices are
Dialogue: 0,0:01:31.75,0:01:35.91,Default,,0000,0000,0000,,relatively low the only suppliers that can\Nturn a profit are those who can get to the
Dialogue: 0,0:01:36.09,0:01:41.34,Default,,0000,0000,0000,,oil cheaply, like Saudi Arabia. As the\Nprice goes up, other suppliers in Nigeria,
Dialogue: 0,0:01:41.52,0:01:44.91,Default,,0000,0000,0000,,Russia, and Alaska who have higher\Nextraction costs starts to become
Dialogue: 0,0:01:45.09,0:01:50.41,Default,,0000,0000,0000,,profitable so they can enter the market.\NAs the price gets higher, even the most
Dialogue: 0,0:01:50.59,0:01:55.31,Default,,0000,0000,0000,,expensive extraction techniques become\Nprofitable. The supply curve slopes upward
Dialogue: 0,0:01:55.49,0:02:00.06,Default,,0000,0000,0000,,because the only way the quantity of oil\Ncan be increased is to exploit higher and
Dialogue: 0,0:02:00.24,0:02:05.27,Default,,0000,0000,0000,,higher cost sources of oil.\NAs the price of oil goes up, the depth of
Dialogue: 0,0:02:05.45,0:02:12.21,Default,,0000,0000,0000,,the oil wells goes down. With this simple\Nline the supply curve summarizes the way
Dialogue: 0,0:02:12.39,0:02:17.17,Default,,0000,0000,0000,,suppliers respond to a change in price\Nincluding how suppliers will enter and
Dialogue: 0,0:02:17.35,0:02:22.50,Default,,0000,0000,0000,,exit the market depending on the price. So\Nfar we've said things like if the price
Dialogue: 0,0:02:22.68,0:02:26.93,Default,,0000,0000,0000,,goes down, buyers will want to buy more or\Nif the price rises suppliers will want to
Dialogue: 0,0:02:27.11,0:02:31.54,Default,,0000,0000,0000,,sell more. But we haven't said anything\Nabout how prices are determined. That's
Dialogue: 0,0:02:31.72,0:02:34.17,Default,,0000,0000,0000,,the subject for the next video,\NEquilibrium.
Dialogue: 0,0:02:35.86,0:02:40.29,Default,,0000,0000,0000,,If you want to test yourself, click\NPractice Questions or
Dialogue: 0,0:02:40.29,0:02:43.03,Default,,0000,0000,0000,,if you're ready to move on,\Njust click Next Video.