Consider the competitive market for oil.Which of the following would result from the discovery of new oil fields that can be profitably accessed at the current price?
A) both b and d
B) an increase in the demand for oil
C) an excess demand for oil as oil companies shift resources to developing the new fields
D) an excess supply of oil if the price of oil fails to drop sufficiently
E) an increase in the expected future price of oil

Question

Quizplus · Accepted Answer

The discovery of new oil fields that can be profitably accessed at the current price would likely result in an excess supply of oil if the price of oil fails to drop sufficiently. This is because the increased supply would push the market towards excess supply, leading to a surplus of oil.

Consider the Competitive Market for Oil