ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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demand ____ right
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demand ____ left
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supply ____ right
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supply ____ left
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Detailed explanation-1: -The correct answer is c. If a large new reserve of crude oil is discovered, the price of this input will decrease, and as a consequence, the supply of gasoline will also increase. That is to say, gasoline suppliers will be able to supply more quantity at any given price (the supply curve shifts to the right).
Detailed explanation-2: -More fuel-efficient cars means there is less need for gasoline. This causes a leftward shift in the demand for gasoline and thus oil. Since the demand curve is shifting down the supply curve, the equilibrium price and quantity both fall.
Detailed explanation-3: -Without oil, cars may become a relic of the past. Streets may turn into public community centers and green spaces filled with pedestrians. Bike use might increase as more people ride to school or work. The Earth will begin to heal from over a century of human-caused climate change.