Final answer:
The discovery of a new oil deposit leads to a shift in the supply curve to the right, resulting in lower prices for petroleum products. The increased abundance of oil following the discovery leads to this decrease in price, as per the law of supply and demand.
Step-by-step explanation:
The discovery of a huge oil deposit shifts the supply curve for oil to the right, leading to lower prices for petroleum products. The correct answer is a. supply, lower. This economic phenomenon occurs because the discovery makes oil more abundant, and according to the law of supply and demand, an increase in supply, if demand remains constant, results in a decrease in equilibrium price and an increase in equilibrium quantity.
Multiple factors can affect the supply and demand for oil. For example, more fuel-efficient cars can reduce the demand for gasoline, leading to a leftward shift in the demand curve. In contrast, cold weather can increase the need for heating oil, resulting in a rightward shift in the demand curve. However, the discovery of a new oil deposit specifically impacts the supply side of the market.