26 In the run up to the war in Iraq that began in 2003, one of the many concerns

Question

26 In the run up to the war in Iraq that began in 2003, one of the many concerns raised was that a war could result in a decrease in the supply of oil. At the same time, the U.S. economy was having a hard time recovering from the recession of 2001 and, as a result, incomes of many consumers had decreased (due to layoffs, wage cuts, and so forth). All else constant, it was reasonable to predict, with certainty, that the combination of these two factors would cause the equilibrium:

quantity of oil to decrease.

quantity of oil to increase.

price of oil to increase.

price of oil to decrease.

Explanation / Answer

Solution:- Option A is correct.

A.Quantity of oil to decrease.

Explaination:-Based on the Simultaneous change in supply and demand quantity of oil to decrease. In the run up to the war in Iraq that began in 2003, one of the many concerns raised was that a war could result in a decrease in the supply of oil. At the same time, the U.S. economy was having a hard time recovering from the recession of 2001 and, as a result, incomes of many consumers had decreased (due to layoffs, wage cuts, and so forth). All else constant, it was reasonable to predict, with certainty, that the combination of these two factors would cause the equilibrium quantity of oil to decrease.

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