Since improved technology continually lowers the cost of discovering and producing oil, how can rising oil prices in recent years be explained?
A) This is evidence against the supply and demand model.
B) Demand has increased by more than supply increased, raising prices.
C) Prices always rise when supply shifts down and to the right.
D) Oil is one of the few commodities that do not follow the supply and demand model.

Question

Quizplus · Accepted Answer

While technology has lowered the cost of discovering and producing oil, demand has been increasing faster than supply. This increase in demand relative to supply has led to rising oil prices in recent years.

Since Improved Technology Continually Lowers the Cost of Discovering and Producing