Economic question help

Economics
Tutor: None Selected Time limit: 1 Day

Which curve would shift if the price of oil drops, Aggregate Supply (AS) and Aggregate Demand (AD) model and AS/AD curve? Explain your answer

Oct 3rd, 2015

Thank you for the opportunity to help you with your question!

Both the Aggregate  demand and  Aggregate supply  curve will shift.

When prices fall the demand of that particular commodity would increase and will therefore shift to the right. This shows rise  in demand .Many consumers would rush to the market to purchase the commodity while the prices are still low.

When prices fall, producers would slow down in supplying their commodities because they will make huge losses. The fall of prices would reduce the supply. The supply curve would shift to the left.

Generally : Fall of prices reduces supply but on the other side it increases demand from consumers

Please let me know if you need any clarification. I'm always happy to answer your questions.
Sep 17th, 2015

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Oct 3rd, 2015
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Oct 3rd, 2015
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