Use the Following to Answer Questions

question 190

Multiple Choice

Use the following to answer questions .
Exhibit: Demand and Supply of Gasoline
-(Exhibit: Demand and Supply of Gasoline) The initial price and quantity (at intersection of S₁ and D) in equilibrium are:

• A) $2.00 and 450 gallons.
• B) $1.50 and 400 gallons.
• C) $2.00 and 200 gallons.
• D) $2.50 and 300 gallons.

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Definitions:

Opportunity Cost

The cost of foregone alternatives when one choice is made over another, representing the benefits that could have been gained by choosing the next best alternative.

Purely Competitive

Refers to a market structure characterized by a large number of small firms, a homogeneous product, and very easy entry and exit.

Supply Curve

A chart that illustrates the connection between a product's price and the quantity that producers are ready to offer.

Economic Efficiency

A condition in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.