In the market for crude oil, if the change in demand due to the falling price of natural gas (a substitute for oil)is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

Question

Quizplus · Accepted Answer

If the increase in demand for oil due to cheaper natural gas is greater than the decrease in supply from disruptions, the overall effect is an increase in demand relative to supply, leading to a decrease in the equilibrium price of oil.

In the Market for Crude Oil, If the Change in Demand