Since improved technology continually lowers the cost of discovering and produci
ID: 1158034 • Letter: S
Question
Since improved technology continually lowers the cost of discovering and producing oil, how can rising oil prices in recent years be explalned? Select one: a. This is evidence against the supply and demand model. O b. Prices always rise when supply shifts down and to the right c. Oil is one of the few commodities that do not follow the supply and demand model. O d. Demand has increased by more than supply increased, raising prices 0 Points out of 1 Consumers who traded in a used car for a new vehicle under the Cash-for-Clunkers program received a voucher worth up to f new vehicle. Wha 4.500 to offset the price of the consumers t effect did that program's requirement to destroy all trade-in cars have on the market for used cars? Select one: o a. The demand for used cars increased, increasing the price of used cars. O b. The demand for used cars decreased, decreasing the price of used cars. O c. The supply of used cars increased, decreasing the price of used cars O d. The supply of used cards decreased, increasing the price of used carsExplanation / Answer
26) Improved technology decreases the cost of production of oil. So the supply of oil will be increased. Supply curve shifts to the right, as a result, the price will be decreased. At the same time if the demand for oil is increased, demand curve shifts to the right, the price will be increased. Therefore, if demand increases more than that of supply, the price will be increased. Option d is correct.
27) As consumers can get voucher worth of $4500 in exchange for the used car, they tend to exchange more used car with a new car. So the supply of used car will be increased, as a result, the price of the used car will be decreased. Option c is correct.