Final answer:
A world-wide economic downturn typically decreases demand for oil, leading to a lower equilibrium price and quantity in the oil market, resulting in a decrease in price and quantity.
Step-by-step explanation:
Assuming we are analyzing the world market for oil, an initial equilibrium price is $50 a barrel with a monthly quantity of 10 trillion barrels. In the event of a world-wide economic downturn, the market would typically experience a shift in demand. As economies slow down, the demand for oil is likely to decrease because businesses and consumers will cut back on usage. This decrease in demand shifts the demand curve to the left, leading to a new equilibrium at a lower price and lower quantity. Therefore, the impact of a world-wide economic downturn on the oil market would be a decrease in price and quantity, as businesses and consumers reduce consumption due to lower economic activity.
Historical experiences, such as the 1973 oil embargo by OPEC, support this hypothesis. Such events have shown that disruptions and changes in the market dynamics shift supply and/or demand curves, affecting the equilibrium price and quantity. In this case of a world-wide economic downturn, the relevant shift is in the demand curve.