The discovery of a large new reserve of crude oil will shift the ________ curve for gasoline, leading to a ________ equilibrium price.

Question

BlackTom AI · Accepted Answer

The question asks about how a large new reserve of crude oil would affect the gasoline market.
Option 1: 'supply, higher' would imply that the supply curve shifts to the left or that equilibrium price rises; both are inconsistent with a large increase in crude oil reserves, which typically makes production cheaper and more abundant, reducing price.
Option 2: 'supply, lower' correctly describes the effect: an increase in crude oil reserves shifts the supply curve to the right (more supply at every price), leading to a lower equilibrium price for gasoline as the market clears at a new, cheaper price level.
Option 3: 'demand, higher' would mean the demand curve shifts to the right, raising price, which does not align with a sudden abundance of crude oil reducing production costs and not directly increasing consumers’ desire for gasoline; demand shifts are driven by factors like income or preferences, not by the oil reserve increase alone.
Option 4: 'demand, lower' would imply the demand curve shifts to the left, lowering price; while price could fall due to cheaper input costs, the direct effect of more crude oil on the market is a shift in supply, not demand, making this choice the incorrect cause-and-effect.
In summary, the key mechanism is that a larger crude oil reserve increases supply, moving the supply curve to the right and lowering the equilibrium price; the other options misidentify the direction of the shift or misattribute the cause to demand changes.

ECON 100 001/002/003/004 Markets

The discovery of a large new reserve of crude oil will shift the curve for gasoline, leading to a equilibrium price.

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ECON 100 001/002/003/004 Markets

The discovery of a large new reserve of crude oil will shift the ________ curve for gasoline, leading to a ________ equilibrium price.

查看解析

登录即可查看完整答案

类似问题

Price decreases for a product are most likely to occur when

Assume that a competitive industry producing a normal good is in long-run equilibrium. If average consumer income decreases, which of the following changes will occur?

Which of the following describes how a market will respond when the scarcity of a good increases?

Assume that consumers consider popcorn and pretzels to be substitutes. A significant decrease in the supply of popcorn will affect the pretzel market by

In the coffee market, which of the following changes will increase the price and decrease the quantity of coffee?

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At an initial equilibrium, supply curve shifts to the left, demand curve remain unchanged. This creates ______________ and prices will _______________ restore the market equilibrium.

Due to the Covid-19 Pandemic, the demand for face masks and sanitizers have greatly increased which also increased the price for these products by 50%. Which of the following statements is true?

更多留学生实用工具

希望你的学习变得更简单

The discovery of a large new reserve of crude oil will shift the curve for gasoline, leading to a equilibrium price.

At an initial equilibrium, demand curve shifts to the left, supply curve remain unchanged. This creates and prices will _ restore the market equilibrium.

At an initial equilibrium, supply curve shifts to the left, demand curve remain unchanged. This creates and prices will _ restore the market equilibrium.