Oil is an important input in the production of plastic. The impact of a fall in the price of oil upon market equilibrium in the plastic market would be ______ in the equilbrium price of plastic and a _____ in the equilibrium quantity of plastic.
A. fall; rise
B. fall; fall
C. rise; fall
D. rise; riseOil is an important input in the production of plastic. The impact of a fall in the price of oil upon market e?
A. Equilibrium price would fall, quantity would rise.
A decrease in the price of an input in production would cause an increase in supply of the product (in this case plastic). This would be represented on a graph as a shift in the supply curve rightward. With a downward-sloping demand curve and an upward-sloping supply curve, this would create a new equilibrium with a lower price, higher quantity than the equilibrium under the old supply curve.Oil is an important input in the production of plastic. The impact of a fall in the price of oil upon market e?
A. Unless you're looking at plastic as a by-product of oil processing. If there is a rise in the demand for other oil products, that could create a surplus of by-product, which would drive down the price of plastic and increase the quantity.
Are you analyzing this from the demand-side or the supply-side?
A. fall; rise
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