they economid on the expensi oil as in the california drought they economized on expensive water. the oil episode also tells us about producer reactions to higher prices. the higher oil price was an incentive search for and produce more oil. this search was risky. @ itequired the promise of higher profits r the producers to undertake it. high prices give producersthis signal. ÷ high prices promise higher profits. meaning businessme can now expand production even though e costs of additionaproduction may be high. in saying this we areescribing the supply curve of an industry. whether oil, potatoes, or videocassette recorders it would generally look like this. the higher the price the more goods producers bring to the marke as the consumer mand curve slopesownward to the southeast the producers' supy cue slopespward to the northeast. if it's a very well-behaved indusy, the intersection of these two curves will determine the price of the product and the quantity of the product. thatin a nutshell,s. not all industries are that well-behaved. o.p.e.c. gets into the act or the government