Refer to the information provided in Figure 26.6 below to answer the question(s) that follow. Figure 26.6
-Refer to Figure 26.6. Suppose the equilibrium price level is 110. An increase in the supply of oil would probably
A) increase both the equilibrium output and the price level.
B) decrease the equilibrium output and increase the price level.
C) increase the equilibrium output and decrease the price level.
D) decrease both the equilibrium output and the price level.

Question

Refer to the information provided in Figure 26.6 below to answer the question(s) that follow.  Figure 26.6
-Refer to Figure 26.6. Suppose the equilibrium price level is 110. An increase in the supply of oil would probably
A) increase both the equilibrium output and the price level. 
B) decrease the equilibrium output and increase the price level. 
C) increase the equilibrium output and decrease the price level. 
D) decrease both the equilibrium output and the price level.

Quizplus · Accepted Answer

An increase in the supply of oil typically reduces production costs, leading to an increase in aggregate supply. This results in a higher equilibrium output and a lower price level.

Refer to the Information Provided in Figure 26