In an economy where heating oil is the primary source of heat for most households, new supplies of natural gas, a substitute for heating oil, are discovered. Natural gas provides heat at a much lower cost. What is the most likely effect of these discoveries on the market price and quantity of heating oil?

Question

Rebecca Phillips

Business

13 March, 21:46

In an economy where heating oil is the primary source of heat for most households, new supplies of natural gas, a substitute for heating oil, are discovered. Natural gas provides heat at a much lower cost. What is the most likely effect of these discoveries on the market price and quantity of heating oil?

+1

Answers (1)

Know the Answer?

Prego · Answer 1

The market price for heating oil will most likely drop and the quantity of heating oil will increase.

Explanation:

The reason for this is because the demand for natural gas is greater since it can be bought in larger quantities at a cheaper price. This spike in demand will the price of natural gases to increase and quantity to decrease as more and more people start to use it.