If the price of oil, a close substitute for coal, increases then the
A)supply curve for coal will shift to the right.
B)demand curve for coal will shift to the right.
C)equilibrium price and quantity of coal will not change.
D)demand curve for coal will shift to the left.
E)supply curve of coal will shift to the left.

Question

Quizplus · Accepted Answer

When the price of a substitute good (like oil) increases, consumers will shift their demand towards the substitute's alternatives (like coal), causing the demand curve for coal to shift to the right. This is because coal becomes relatively cheaper and more attractive to consumers compared to oil.

If the Price of Oil, a Close Substitute for Coal