Wednesday, February 3, 2010

Changes in Technology Increased Natural Gas Reserves

The New York Times reported that new drilling technology has resulted in a 35% increase in estimated natural gas reserves (i.e. supply) here in the US. Thus we have an example of how a change in technology (new drilling for natural gas) has increased the supply of natural gas.

From Prin. of Micro (001), if we assume the demand for natural gas remains constant, then the change in technology will effectively shift the supply curve for natural gas to the right, and lower the price of natural gas.

Check out more examples of changes in demand, changes in supply or changes in both.

1 comment:

md said...

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