Use a demand and supply diagram to show the price of oil following investment in oil production facilities?

Does the demand curve shift to the left or right? Because I believe the P1 goes up and Q1 move to the right. I am just follow the supply law. Help me please

2 Responses to “Use a demand and supply diagram to show the price of oil following investment in oil production facilities?”

  1. Spotty J Says:

    The demand curve won’t shift, why would it? A supplier making an investment in its operation has no impact on the existing demand in the market. The D curve stays put.

    But the supply curve shifts to the right. The investment presumably leads to more supply at existing prices, and means the market now has the ability to supply more oil than before. That means there is a fundamental shift in the supply curve, which is represented by moving the S curve. The result is a new intersection at lower prices, which is what you’d expect.

  2. anonymous Says:

    The demand curve will not shift as this is a change in a supply determinant.

    The supply curve would shift to the right as the investment in oil production facilities could lower the cost of production of oil. Hence, supply would increase as there would be an increase in suppliers due to the fall in production cost. P1 would go DOWN (as lower cost of producing means producers can charge a lower price) and Q1 would move to the right (due to an increase in supply).