Suppose new drilling techniques increase the world oil supply. In the long run, output will ________
and the price level will ________.
A) remain unchanged; decrease
B) remain unchanged; remain unchanged
C) increase; decrease
D) increase; remain unchanged
E) increase; increase

Question

Quizplus · Accepted Answer

In the long run, an increase in the world oil supply will lead to an increase in output due to lower production costs, and the price level will decrease as the supply curve shifts rightward, leading to lower equilibrium prices.

Suppose New Drilling Techniques Increase the World Oil Supply