Law+of+Demand+AP+MICE

= Law of Demand = The Law of Demand states that as price increases, the quantity demanded decreases.

As the definition and graph implies, in the demand relationship, price and quantity demanded have an inverse relationship.

=Economics in the News=

The events taking place across northern Africa and the Middle East. The effects that they will take on the oil flow out of this region is uncertain. Uncertainty in the oil market has caused prices to rise. As these oil prices rise, the quantity demanded will fall as shown through the law of demand. The demand will then rise in its substitution markets.
 * Abstract:**

=British analysts: Rising oil prices will not lead to global recession = Oil prices on world markets continue to rise amid fears that the hydrocarbon flow will be halted from Libya as a result of the political unrest in the country. Following the auction on Wednesday, Feb. 23, April futures price of Brent rose by $5.47 a barrel to $111.25 per barrel. The cost of the April futures on the U.S. grade of oil WTI on the New York Mercantile Exchange rose by $2.68 to $98.1 per barrel. Protests against the ruling regime and unrest in Libya have continued since Feb. 15. The protestors demand Libyan leader Moammar Gaddafi to leave the post that he has kept for 42 years. According to Human Rights Watch, clashes between protesters and law enforcement officers killed at least 233 people to date. A number of foreign companies have stopped their operations in Libya on the backdrop of unrests in the country. In particular, British BP, Italy's Eni, French Total, Norwegian Statoil and Anglo-Dutch concern Shell, announced the temporary reduction or cessation of work on oil and gas production in Libya. According to analysts, political developments in Libya, which led to the halt of oil production in the country, may trigger a new global energy crisis. There are also big concerns that rising oil prices to record levels could provoke a global economic crisis. Analyst on energy policy at the U.S. Cascade Policy Institute, Todd Wynn told [|Trend] earlier that high oil prices could become an obstacle to economic recovery of the United States and other world regions. Pioneer Astronautics President Robert Zubrin said high oil prices could plunge the global economy into a deep recession for many years. Meanwhile, analysts at one of Britain's Capital Economics believe that the rise in oil prices will not cause a global recession. According to their forecasts, world economic growth this and next year will be even lower than in 2010. It is unlikely that the main reason for this will be the price of oil, however. "To the extent that higher oil prices reflect buoyant demand, particularly from rapidly developing economies, rising oil prices and rapid growth can go hand in hand. This was the case between 2004 and 2008, and again between 2009 and 2010, "Capital Economics' report reads. In contrast, the same increase in the price of oil due to a supply shock or a geo-political crisis is far more likely to be accompanied by slower growth. According to forecasts Capital Economics, oil prices will fall sharply in late 2011. The price for North Sea Brent is projected to reach $85 per barrel in late 2011. British analysts believe Libya should be both first and last of the major producers to see any significant disruption to oil output, allowing the risk premium to fall. Libya is eighth in terms of crude oil producers among the 12 OPEC countries and third in Africa, after Nigeria and Angola. It occupies less than two percent of global oil production. The main importer of Libyan oil is Italy, followed by Germany, France and Spain. Libyan oil imports cover 51 percent of the needs of Italy, 13 percent of the needs of Germany and 5 percent of the needs of France.