-The Above Figure Shows the Market for Gasoline

question 82

Multiple Choice

-The above figure shows the market for gasoline. When a hurricane destroys a major refinery that refines oil into gasoline, the

• A) demand curve for gasoline does not shift, and the supply curve of gasoline shifts from S₁ to S₂.
• B) demand curve for gasoline shifts from D₁ to D₂ and the supply curve of gasoline shifts from S₂ to S₁.
• C) demand curve for gasoline does not shift, and the supply curve of gasoline shifts from S₂ to S₁.
• D) demand curve for gasoline shifts from D₁ to D₂ and the supply curve of gasoline does not shift.

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Definitions:

Nonconforming Goods

Goods delivered by a vendor that do not meet the specifications or quality standards agreed upon in a contract.

Specified Goods

Items that are explicitly defined or identified in a transaction or contract.

Contract

An agreement based on mutual promises between two or more competent parties to do or to refrain from doing some particular thing that is neither illegal nor impossible. The agreement results in an obligation or a duty that can be enforced in a court of law.

Warranty of Fitness

An assurance that a product or service is suitable for the specific purpose for which it was bought, often implied in sales contracts.