Suppose the cost of pumping oil increases. How will this affect the demand for oil and gasoline (which comes from oil) ? a. Demand will increase. b. Demand will decrease. c. Demand will not necessarily change.

Question

Janiyah Stout

Business

16 March, 02:45

Suppose the cost of pumping oil increases. How will this affect the demand for oil and gasoline (which comes from oil) ? a. Demand will increase. b. Demand will decrease. c. Demand will not necessarily change.

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Answers (1)

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Amiya Andrade · Answer 1

Option (c) is correct.

Explanation:

If there is an increase in the cost of pumping oil, this means that the cost of production of oil increases. Hence, this will cause the supply curve of oil which shifts leftwards and leave the demand curve unchanged. This will only cause a movement along the demand curve not a shift which means that there is a fall in the quantity demanded.

Therefore, the demand for oil and gasoline will not necessarily change.