Given the following circumstances, indicate whether or not the aggregate supply curve would shift and, if so, which way would it shift:The price of a barrel of oil doublesAn advance in alternative energy technology significantly reduces its costIn order to maintain a relatively clean air quality, a carbon emissions tax is levied against firms with a carbon footprintAs a result of fracking, the price of natural gas is significantly reducedAdvances in technology increase the productivity of the American worker, on average, by 30%

Note : Since , there are multiple sub parts of the question , only the first three sub parts shall be answered at a time . If you seek the answers of the unanswered sub parts , do repost it again specifically . The answer to the first three sub parts are as under :a)When the price of a barrel of oil doubles , the aggregate supply curve will shift leftward . Oil is used as a raw material by a number of firms and also oil is demanded for transportation purposes . Therefore , an increase in the price of a barrel of oil will also increase the cost of production . Due to an increase in the cost of production , the firms will choose to curtail their supply for which the Aggregate supply curve shifts leftward . b)An advancement in the alternative energy technology will shift the Aggregate supply curve to the right . This is because , the alternative energy technology reduces the cost of production significantly . When the production cost falls , the aggregate supply increases . c)When the carbon emission tax is levied on the firms , that tax amount adds to the production cost of the firms . To compensate the loss due to taxes , the firms will reduce their supply of goods and as a result , the aggregate supply curve will shift leftward .

Answered: Given the following circumstances,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given the following circumstances, indicate whether or not the aggregate supply curve would shift and, if so, which way would it shift:

- The price of a barrel of oil doubles
- An advance in alternative energy technology significantly reduces its cost
- In order to maintain a relatively clean air quality, a carbon emissions tax is levied against firms with a carbon footprint
- As a result of fracking, the price of natural gas is significantly reduced
- Advances in technology increase the productivity of the American worker, on average, by 30%

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