Question

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?

Answer 1

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

Step-by-step 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.