Which statement below is incorrect Oil supply decreases if o

Which statement below is incorrect? Oil supply decreases if oil prices are expected to rise in the future. O Production decisions are made long before a product is ready for sale Changes in seller expectations could shift a supply curve. Production decisions are made based on facts, not expectations.

Solution

1.

If oil prices are expected to rise in the future, then it is profitable to produce more oil, hence the supply of oil increase.

Hence the given statement is false that the supply decrease with the increase in the expectations that the price will rise.

Hence option First is the correct answer because this is false statement.

2.

With the rightward shifts of the supply curve, the equilibrium price decrease and equilibrium quantity increase. But there will be less decrease in the price, compare to an increase in the equilibrium quantity level.

Hence it can be said that with the rightward shifts of the supply curve there is very less chance of decrease in the equilibrium price.

Hence option fourth is the correct answer.

Option fourth is: Equilibrium price decrease.