[Script Info]
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[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.00,0:00:05.22,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,0:00:12.88,0:00:15.22,Default,,0000,0000,0000,,- [Narrator] Now that we've got\Nthe demand curve down,
Dialogue: 0,0:00:15.22,0:00:17.41,Default,,0000,0000,0000,,let's move on to the supply curve.
Dialogue: 0,0:00:17.41,0:00:20.38,Default,,0000,0000,0000,,A supply curve shows how much\Nof a good suppliers
Dialogue: 0,0:00:20.38,0:00:23.76,Default,,0000,0000,0000,,are willing and able to supply\Nat different prices.
Dialogue: 0,0:00:23.77,0:00:25.74,Default,,0000,0000,0000,,As with the demand curve,\Nthere's a supply curve
Dialogue: 0,0:00:25.74,0:00:27.81,Default,,0000,0000,0000,,for every good and service.
Dialogue: 0,0:00:27.81,0:00:29.97,Default,,0000,0000,0000,,And again the ideas\Nare the same, so let's look
Dialogue: 0,0:00:29.97,0:00:31.93,Default,,0000,0000,0000,,at the supply curve for oil.
Dialogue: 0,0:00:31.93,0:00:34.18,Default,,0000,0000,0000,,We see an intuitive relationship\Nbetween price
Dialogue: 0,0:00:34.18,0:00:35.86,Default,,0000,0000,0000,,and the quantity supplied.
Dialogue: 0,0:00:35.86,0:00:38.04,Default,,0000,0000,0000,,As the price goes up,\Nthe quantity of oil
Dialogue: 0,0:00:38.04,0:00:40.94,Default,,0000,0000,0000,,that companies are willing\Nto supply increases.
Dialogue: 0,0:00:40.94,0:00:44.25,Default,,0000,0000,0000,,In this example, in a low price,\N$5 per barrel,
Dialogue: 0,0:00:44.25,0:00:47.79,Default,,0000,0000,0000,,let's say 10 million barrels\Nof oil are supplied per day.
Dialogue: 0,0:00:47.79,0:00:51.82,Default,,0000,0000,0000,,At $20 per barrel,\N25 million barrels are supplied,
Dialogue: 0,0:00:51.82,0:00:55.62,Default,,0000,0000,0000,,and at $55 per barrel,\N50 million barrels are supplied.
Dialogue: 0,0:00:55.62,0:00:59.38,Default,,0000,0000,0000,,So in general, a higher price\Nmeans a greater quantity supplied.
Dialogue: 0,0:01:01.16,0:01:03.53,Default,,0000,0000,0000,,Let's delve deeper and see why.
Dialogue: 0,0:01:03.61,0:01:05.43,Default,,0000,0000,0000,,Oil exists all over the world,
Dialogue: 0,0:01:05.43,0:01:07.66,Default,,0000,0000,0000,,but it's not equally easy\Nto extract.
Dialogue: 0,0:01:07.66,0:01:10.54,Default,,0000,0000,0000,,In some places like Saudi Arabia,\Nit's really easy to get oil
Dialogue: 0,0:01:10.54,0:01:11.61,Default,,0000,0000,0000,,out of the ground.
Dialogue: 0,0:01:11.61,0:01:13.70,Default,,0000,0000,0000,,It's costs about $2 a barrel\Nto extract.
Dialogue: 0,0:01:13.70,0:01:16.49,Default,,0000,0000,0000,,Oil in the US, like from Alaska,\Nis a lot deeper
Dialogue: 0,0:01:16.49,0:01:19.86,Default,,0000,0000,0000,,and getting out cost more,\Nat least $10 per barrel.
Dialogue: 0,0:01:20.42,0:01:23.30,Default,,0000,0000,0000,,And producing oil from an oil rig,\Nlike the Atlantis rig
Dialogue: 0,0:01:23.30,0:01:25.83,Default,,0000,0000,0000,,in the Gulf Coast,\Nis even more expensive.
Dialogue: 0,0:01:25.83,0:01:28.32,Default,,0000,0000,0000,,That rig has to descend\Nmore than a mile underwater
Dialogue: 0,0:01:28.32,0:01:30.32,Default,,0000,0000,0000,,before drilling even begins.
Dialogue: 0,0:01:30.32,0:01:33.82,Default,,0000,0000,0000,,When oil prices are relatively low,\Nthe only suppliers
Dialogue: 0,0:01:33.82,0:01:35.81,Default,,0000,0000,0000,,that can turn a profit\Nare those who can get
Dialogue: 0,0:01:35.81,0:01:38.10,Default,,0000,0000,0000,,to the oil cheaply,\Nlike Saudi Arabia.
Dialogue: 0,0:01:38.53,0:01:41.38,Default,,0000,0000,0000,,As the price goes up,\Nother suppliers in Nigeria,
Dialogue: 0,0:01:41.38,0:01:44.48,Default,,0000,0000,0000,,Russia, and Alaska, who have higher\Nextraction costs,
Dialogue: 0,0:01:44.48,0:01:46.98,Default,,0000,0000,0000,,start to become profitable\Nso they can enter the market.
Dialogue: 0,0:01:48.06,0:01:49.56,Default,,0000,0000,0000,,As the price gets higher,
Dialogue: 0,0:01:49.56,0:01:52.26,Default,,0000,0000,0000,,even the most expensive\Nextraction techniques
Dialogue: 0,0:01:52.26,0:01:53.66,Default,,0000,0000,0000,,become profitable.
Dialogue: 0,0:01:53.66,0:01:57.11,Default,,0000,0000,0000,,The supply curve slopes upward\Nbecause the only way the quantity
Dialogue: 0,0:01:57.11,0:02:00.35,Default,,0000,0000,0000,,of oil can be increased\Nis to exploit higher and higher
Dialogue: 0,0:02:00.35,0:02:02.58,Default,,0000,0000,0000,,cost sources of oil.
Dialogue: 0,0:02:02.58,0:02:04.31,Default,,0000,0000,0000,,As the price of oil goes up,
Dialogue: 0,0:02:04.31,0:02:07.74,Default,,0000,0000,0000,,the depth of the oil wells\Ngoes down.
Dialogue: 0,0:02:07.74,0:02:11.96,Default,,0000,0000,0000,,With this simple line\Nthe supply curve summarizes
Dialogue: 0,0:02:11.96,0:02:15.12,Default,,0000,0000,0000,,the way suppliers respond\Nto a change in price
Dialogue: 0,0:02:15.12,0:02:18.11,Default,,0000,0000,0000,,including how suppliers\Nwill enter and exit the market
Dialogue: 0,0:02:18.11,0:02:20.26,Default,,0000,0000,0000,,depending on the price.
Dialogue: 0,0:02:20.88,0:02:23.31,Default,,0000,0000,0000,,So far, we've said things\Nlike if the price goes down,
Dialogue: 0,0:02:23.31,0:02:26.17,Default,,0000,0000,0000,,buyers will want to buy more\Nor if the price rises,
Dialogue: 0,0:02:26.17,0:02:27.91,Default,,0000,0000,0000,,suppliers will want to sell more.
Dialogue: 0,0:02:27.91,0:02:31.23,Default,,0000,0000,0000,,But we haven't said anything\Nabout how prices are determined.
Dialogue: 0,0:02:31.23,0:02:33.12,Default,,0000,0000,0000,,That's the subject\Nfor the next video,
Dialogue: 0,0:02:33.12,0:02:35.46,Default,,0000,0000,0000,,Equilibrium.
Dialogue: 0,0:02:36.40,0:02:39.70,Default,,0000,0000,0000,,If you want to test yourself,\Nclick "Practice Questions."
Dialogue: 0,0:02:39.70,0:02:43.17,Default,,0000,0000,0000,,Or if you're ready to move on,\Njust click "Next Video".
Dialogue: 0,0:02:43.17,0:02:48.57,Default,,0000,0000,0000,,♪ [music] ♪