If Coal and Oil Are Substitute Inputs in the Production

question 88

Multiple Choice

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

• A) will increase the demand for coal.
• B) will reduce the demand for coal.
• C) will increase the supply of coal.
• D) will reduce the supply of coal.
• E) will not affect the demand for coal.

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Definitions:

Durable Expenditures

Expenses on goods that have a useful life of more than three years, such as appliances, machinery, and equipment.

Money Supply

The total amount of monetary assets available in an economy at a specific time.

Interest Rates

The cost of borrowing money or the return on investment for savings and loans, usually expressed as a percentage.

Consumption And Investment

The activities of spending on goods and services for current use and investing in assets for future returns.