Increases in the wage rates of coal miners and decreases in the price of natural
ID: 1230946 • Letter: I
Question
Increases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to :
a) rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of coal would fall.
b) rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of coal would increase.
c) rise, but the equilibrium quantity of coal would rise or rall depending on the magnitude of the changes.
d) rise, but the equilibrium of coal would fall.
e) fall, but the equilibrium quantity of coal would rise or fall depending on the magnitude of the changes.
Please explain why
Explanation / Answer
rise or fall depending on the magnitude of the changes; the quantity of coal bought and sold would fall. A is correct however reason is wrong. Supply would fall shift up and to the left.. And the decrease in price of a substitute would cause the demand curve to shift to the left and down. It would demand on the magnitude of the shift but Q quantity would decrease.