Question

The oil company 'Standard Oil' delivers Q amount of oil to the market. They developed a new technology which helps them drill oil at a cheaper cost. As a result, 'Standard Oil' would be willing to ________.

• A. supply more oil at a given price
• B. supply less oil at a given price
• C. supply the same amount of oil at a lower price
• D. supply the same amount of oil at a higher price

Answer 1

Answer: (A), (C)

The correct options are
A

supply more oil at a given price

C

supply the same amount of oil at a lower price

If the costs of production go down, the supply curve shifts to the right as the willingness to sell would be greater at any given price. Hence, 'Standard Oil' would supply more oil at a given price and the same amount of oil at a lower price.