Question

If the price of oil, a close substitute for coal, increases then:

a. the demand curve for coal will shift to the right.
b. equilibrium price and quantity of coal will not change.
c. supply curve for coal will shift to the right.
d. demand curve for coal will shift to the left.
e. supply curve of coal will shift to the left.

Answer 1

A

Step-by-step explanation:

Substitute goods are goods that can be used in place of another good.

if the price of a good increases, the demand for the substitute increases and if the price of the good reduces, the demand for the substitute increases.

If the price of oil increases, it becomes cheaper to buy coal. As a result, there would be a rightward shift of the demand curve for coal. As a result, the equilibrium price and quantity would increase