Final answer:
When U.S. oil companies find major reserves of oil off the coast of Texas and increase refinery capacity, it will lead to an increase in the supply of oil. This will result in a decrease in the price of oil and an increase in the quantity of oil in the market.
Step-by-step explanation:
When U.S. oil companies find major reserves of oil off the coast of Texas and increase refinery capacity, it will lead to an increase in the supply of oil. This will shift the supply curve to the right, resulting in a new equilibrium where the quantity of oil supplied exceeds the quantity demanded. As a result, the price of oil is likely to decrease, while the quantity of oil in the market is likely to increase.
The supply curve will shift to the right because there is an increase in the amount of oil available in the market. As more oil is discovered and the refinery capacity is increased, the oil companies are able to produce and offer more oil for sale. This shift in supply will lead to a new equilibrium where the quantity supplied exceeds the quantity demanded.
As the supply of oil increases, the price of oil is likely to decrease. This is because there will be more oil available in the market, and suppliers may compete with each other by lowering their prices to attract customers. In addition, the increase in supply may also lead to an increase in the quantity of oil in the market.