Suppose a legislation passed by the government encourages ...

[burton19126]

Suppose a legislation passed by the government encourages domestic oil exploration thereby reducing petroleum imports substantially. If the cost of production is uniform for all producers, which of the following will be observed in the petroleum market?
 a. The world price of petroleum would decline.
  b. The domestic price of petroleum would decline.
  c. The world price of gasoline will remain unaffected.
  d. Crude oil consumption in the domestic and the world market would decrease.

Question 2

If at the profit-maximizing level of output, a typical perfectly competitive firm's price is greater than its average total cost, the firm should increase output.
 a. True
  b. False
  Indicate whether the statement is true or false

[shaikhs]

Answer to Question 1

C

Answer to Question 2

False

[burton19126]

Thank you

[shaikhs]

Happy to help you