During the last few years we have seen a rise in the production of natural gas in the United States. This lead to a decline in the price of natural gas. If we assume that the price of oil remained roughly the same, this also lead to a reduction in the ratio of the price of natural gas to the price of oil. This resulted in a substitution from oil to natural gas in some production processes. Which of the following statements is incorrect in describing this scenario (assume that all else is held constant):
A) The demand for oil decreased
B) The quantity demanded of natural gas increased
C) The quantity demanded of oil decreased
D) The demand for oil changed

Question

Quizplus · Accepted Answer

The Answer of During the last few years we have seen a rise in the production of natural gas in the United States. This lead to a decline in the price of natural gas. If we assume that the price of oil remained roughly the same, this also lead to a reduction in the ratio of the price of natural gas to the price of oil. This resulted in a substitution from oil to natural gas in some production processes. Which of the following statements is incorrect in describing this scenario (assume that all else is held constant):
A) The demand for oil decreased
B) The quantity demanded of natural gas increased
C) The quantity demanded of oil decreased
D) The demand for oil changed

During the Last Few Years We Have Seen a Rise