If the Price of Crude Oil Increases and the Number

question 37

Multiple Choice

If the price of crude oil increases and the number of people who own cars falls:

• A) the equilibrium price of gasoline will increase and equilibrium quantity of gasoline will decrease.
• B) the equilibrium price of gasoline will decrease and equilibrium quantity of gasoline will be uncertain.
• C) the equilibrium price of gasoline will be uncertain and equilibrium quantity of gasoline will decrease.
• D) the equilibrium price of gasoline will be uncertain and equilibrium quantity of gasoline will increase.

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Definitions:

Consumer Surplus

The gap between what consumers are prepared and can afford to pay for a product or service, and what they end up paying in reality.

Producer Surplus

The difference between the amount producers are willing to accept for a good versus what they actually receive.

Marginal Benefit

Marginal benefit is the additional satisfaction or utility received by consuming one more unit of a good or service.

Marginal Cost

The cost attached to the production of one additional unit of a good or service.