Which of the following would cause the demand curve for gasoline to shift to the

Question

Which of the following would cause the demand curve for gasoline to shift to the right? O A. A decrease in the price of gasoline 0 B. A decrease in income, assuming gasoline is a normal good O C. A decrease in the price of (gasoline-powered) cars O D. A decrease in the expected future price of gasoline Reset Selection estion 2 of 6 1.0 Points Suppose that demand for a good decreases and, at the same time, supply of the good increases. The effect on price is O A. an increase, uncertain O B. a decrease, uncertain OC. uncertain, an increase and the effect on quantity is D. uncertain, a decrease

Explanation / Answer

1) Demand curve shifting to the right implies that demand increases . A decrease in the price of gasoline powered cars means that price of a complimentary good falls . People will consume more of such cars . So they will require more gasoline to drive them . Hence the demand for gasoline will rise .

Decrease in income and decrease in expected future price actually decrease demand for gasoline at present . A decrease in price of gasoline ( ceteris paribus ) will cause movement along the curve and not shift of the curve .

Answer : C

2) Demand curve shifts left . Supplu curve shifts right . Price will fall definitely but effect on quantity is ambiguous since decrease in demand causes quantity to fall but increase in supply causes quantity to rise . Answer : B

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.