Consider Cars and Gasoline

question 94

Multiple Choice

Consider cars and gasoline. Other things being equal, when the price of cars decreases, the demand for gasoline is likely to

• A)decrease because the two goods are complements.
• B)remain unchanged because cars and gasoline are two distinct markets.
• C)remain unchanged.
• D)remain unchanged because cars and gasoline are produced independently of one another.
• E)increase because the two goods are complements.

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Definitions:

Positive Statement

An objective statement that can be tested and validated by referring to the available evidence, often used in economics to describe what is happening.

Normative Statement

An opinion or assertion about how the world ought to be, often reflecting values or judgments that cannot be tested or proven true or false.

Production Possibilities Frontier

A graph that shows the various combinations of output that an economy can possibly produce, given the available factors of production and the available production technology.

Trade-Off

A choice made in a given situation where one aspect of a set or design is reduced or forfeited to improve other elements.