Table 5-6

-Refer to Table 5-6.Which scenario describes the market for oil in the short run in comparison to the long run?
A) Scenario A describes both the short run and the long run.
B) Scenario D describes both the short run and the long run.
C) Scenario D describes the short run, whereas scenario A describes the long run.
D) Scenario C describes the short run, whereas scenario B describes the long run.

Question

Table 5-6
 
-Refer to Table 5-6.Which scenario describes the market for oil in the short run in comparison to the long run?
A) Scenario A describes both the short run and the long run. 
B) Scenario D describes both the short run and the long run. 
C) Scenario D describes the short run, whereas scenario A describes the long run. 
D) Scenario C describes the short run, whereas scenario B describes the long run.

Quizplus · Accepted Answer

Scenario D shows a decrease in demand and an increase in supply, which would lead to a decrease in price in the short run. However, in the long run, firms may exit the market due to low profits, causing a decrease in supply and eventually driving the price back up. Scenario A shows an increase in demand and a decrease in supply, which would lead to an increase in price in the long run as firms enter the market and increase supply. Therefore, scenario D describes the short run, whereas scenario A describes the long run.

Table 5-6 -Refer to Table 5-6.Which Scenario Describes the Market for Oil