Suppose the Price of an Important Natural Resource Such as Oil

question 16

Multiple Choice

Suppose the price of an important natural resource such as oil falls. What will be the effect on the short-run aggregate supply curve?

• A) There will be movement to the left, along the aggregate supply curve.
• B) The aggregate supply curve will shift to the left.
• C) There will be movement to the right, along the aggregate supply curve.
• D) The aggregate supply curve will shift to the right.

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Definitions:

Pareto Efficient

A condition of resource allocation in which making one person better off necessitates making another person worse off.

Net Benefit

The total benefits of a decision or action, subtracting any associated costs, reflecting the overall value or payoff.

Equitable Distribution

The fair and just allocation or distribution of resources among members of a society.

Pareto Optimal

A state of allocation of resources from which it is impossible to reallocate to make any individual or preference criterion better off without making at least one individual or preference criterion worse off.