Question

A leftward shift of the supply curve for oil in the United States is most likely to result from:

A. A decrease in the fees that oil companies must pay for drilling licenses
B. An increase in the subsidy for oil exploration and drilling
C. A decrease in the world price of oil
D. An increase in the costs of exploration and drilling for oil

Answer 1

An increase in the costs of exploration and drilling for oil is the most likely cause of a leftward shift in the supply curve for oil in the United States, leading to a higher price and lower quantity of oil. The correct option is (D)

Step-by-step explanation:

A leftward shift of the supply curve for oil in the United States is most likely to result from an increase in the costs of exploration and drilling for oil.

This increase in production costs makes it more expensive for companies to extract and produce oil, leading to a decrease in the supply of oil at every price level, which is represented graphically as a leftward shift of the supply curve.

This shift tends to result in a higher equilibrium price and a lower equilibrium quantity of oil, as the supply curve moves up along the demand curve.