Register
During the last few years we have seen a rise in the production of natural gas in the United States. This lead to a decline in the price of natural gas. If we assume that the price of oil remained roughly
167k views
1 vote
During the last few years we have seen a rise in the production of natural gas in the United States. This lead to a decline in the price of natural gas. If we assume that the price of oil remained roughly the same, this also lead to a reduction in the ratio of the price of natural gas to the price of oil. This resulted in a substitution from oil to natural gas in some production processes. Which of the following statements is incorrect in describing this scenario (assume that all else is held constant):

A. The demand for oil changed
B. The quantity demanded of oil decreased
C. The quantity demanded of natural gas increased
D. The demand for oil decreased

User J Grover
by
4.9k points

1 Answer

3 votes

Answer: The correct answer is "B. The quantity demanded of oil decreased".

Explanation: The statement "B. The quantity demanded of oil decreased" is incorrect in describing this scenario because a change in the quantity demanded would be caused by a change in the price, in this case the price of oil remained more or less the same, therefore the change is in demand, and is produced at the price of a substitute good (natural gas) low.

User Bsmoo
by
5.3k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

5.4m questions

7.0m answers

Other Questions

Decker Tires' free cash flow was just FCF0 = $1.32. Analysts expect the company's free cash flow to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The WACC
For this question, assume that the expected rate of inflation is a function of the past year's inflation. Also, assume that the unemployment rate has been equal to the natural rate of unemployment for
Misk Co. purchased the following securities during 20X7 to be classified as held-to-maturity securities, trading securities, or available-for-sale securities: I. Debt securities bought and held for the
This problem has been solved! See the answer Currently, Warren industries can sell 15-year, $1,000 par value bonds paying annual interest at a 12% coupon rate. As a result of current interest rates, the
Bob and Tom are two criminals who have been arrested for burglary. The police put Tom and Bob in separate cells. They offer to let Bob go free if he confesses to the crime and testifies against Tom. Bob
Link Copied!