Answer to Question #172188 in Economics for JESH

Question

Global crude oil price is expected to jump to US$55 per barrel from US$53 in 2017 due to limited production; World Bank has projected in its commodity markets outlook. Using an industry of your choice as a case study, discuss the impact the upward projection in price of crude oil would exert on the viability of doing business in the identified industry. 

Answer 1

If an industry uses crude oil or fuel made of oil, then the upward projection in price of crude oil would increase the cost of production and decrease supply, so the viability of doing business in such industry will decrease.