Question

Decreases in the wage rates of coal miners (an input price), and decreases in the price of natural gas (a consumption substitute for coal), would cause the price of coal to:

Group of answer choices
A.fall, but the equilibrium quantity of coal would increase or decrease depending on the magnitude of the changes.
B.rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of coal would increase.
C. rise, but the equilibrium quantity of coal would increase or decrease depending on the magnitude of the changes.
D. rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of coal would decrease.

Answer 1

Decreases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to A. fall.

Step-by-step explanation:

When the wage rates of coal miners decrease, it reduces the cost of production for coal mining companies. This would cause the supply of coal to increase, leading to a decrease in the price of coal. On the other hand, if the price of natural gas decreases, it becomes a more attractive substitute for coal.

This would decrease the demand for coal, leading to a decrease in the price of coal. Therefore, decreases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to fall.