You are an analyst covering the oil and gas markets. You know from experience that natural gas and fuel oil are competing fuels; they are substitutes in certain production processes. A new technology has made it more cost-effective to extract natural gas from hard-to-reach geological formations. Using the supply and demand model, explain how this technological development will change (1) the market for natural gas and (2) the market for fuel oil.
You are an analyst covering the oil and gas markets. You know from experience that natural gas and fuel oil are competing fuels; they are substitutes in certain production processes. A new technology has made it more cost-effective to extract natural gas from hard-to-reach geological formations. Using the supply and demand model, explain how this technological development will change (1) the market for natural gas and (2) the market for fuel oil.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are an analyst covering the oil and gas markets. You know from experience that natural gas and fuel oil are competing fuels; they are substitutes in certain production processes. A new technology has made it more cost-effective to extract natural gas from hard-to-reach geological formations. Using the supply and demand model, explain how this technological development will change (1) the market for natural gas and (2) the market for fuel oil.
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