# MBA 620 9042 Financial Decision Making (2191)- Step 2 Create a Supply and Demand Graph

Step 2: Create a Supply and Demand Graph

The first assignment Frank has given you is to develop an industry analysis through a supply and demand graph. In order to develop the graph, you will need to understand demand, supply, and the demand curve and utility. You should also be able to identify the point of equilibrium. The graph will be used to help the client, ExxonMobil, determine where they stand within the oil and gas industry.

Frank has passed along some data he has gathered to help you create a supply and demand graph for the oil and gas industry. This graph will be used as part of a comprehensive analysis to advise the client about optimal production levels. View Frank’s data and read the instructions on the Supply and Demand Graph worksheet of the Project 1 Excel Workbook, which you will access below. You will use differeant sheets from this workbook in the subsequent steps of this project.

To help ExxonMobil, you must determine what economic model best describes the oil and gas industry. Is this industry in perfect competition? Is it an oligopoly? Or a monopoly? In order to make this determination, read about perfect competition, oligopoly, and monopoly. You should also read competition production and pricing decisions, monopoly production and pricing decisions, and price discrimination.

Here is an illustrated example of a supply and demand graph with the point of equilibrium:

Equilibrium Price of Coffee

When we combine the demand and supply curves for a good in a single graph, the point at which they intersect identifies the equilibrium price and equilibrium quantity. Here, the equilibrium price is \$6 per pound. Consumers demand, and suppliers supply, 25 million pounds of coffee per month at this price.