Read the articles below about oil prices and price gouging (some of them are a little old but still relevant): .usatoday.com/money/perfi/columnist/krantz/...

Read the articles below about oil

prices and price gouging (some of them are a little old but still relevant):

.usatoday.com/money/perfi/columnist/krantz/2006-05-09-gasoline-prices_x.htm”>http://www.usatoday.com/money/perfi/columnist/krantz/2006-05-09-gasoline-prices_x.htm

.cato.org/pub_display.php?pub_id=5150″>http://www.cato.org/pub_display.php?pub_id=5150

.townhall.com/columnists/ThomasSowell/2005/08/24/an_oil_crisis_part_ii”>http://www.townhall.com/columnists/ThomasSowell/2005/08/24/an_oil_crisis_part_ii

.wsj.com/economics/2012/03/16/gas-prices-the-kim-kardashian-of-inflation/?KEYWORDS=gas+prices”>http://blogs.wsj.com/economics/2012/03/16/gas-prices-the-kim-kardashian-of-inflation/?KEYWORDS=gas+prices

Answer the questions below. Be sure to explain your answers completely and show

you read each article and thought about what it said.

Question1:

According to the articles, why did prices rise sharply over the past 5

years? Answer in terms of a supply-demand analysis, saying what specifically

has happened to supply and demand and how this has increased prices.

Question 2:

Do the higher prices support that oil companies are “price

gouging”? In economic terms, can price gouging exist and if so, under what

conditions? What would be the likely impact of price controls or an excess

profits tax on the market for oil? Explain, using supply/demand concepts.