If the Price of Oil Increases Significantly, Buyers and Sellers

question 239

Multiple Choice

If the price of oil increases significantly, buyers and sellers of gasoline will both expect the price of gasoline to also increase.If sellers of gasoline act on their expectations more than the buyers do, then

• A)the equilibrium price of gasoline will increase, while the equilibrium quantity will decrease.
• B)the equilibrium price of gasoline will increase, while the equilibrium quantity will increase.
• C)the equilibrium price of gasoline will decrease, while the equilibrium quantity will decrease.
• D)the equilibrium price of gasoline will decrease, while the equilibrium quantity will increase.

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Definitions:

Economic Aims

The goals or objectives that an organization or government seeks to achieve to ensure economic growth, stability, and prosperity.

Social Aims

Objectives that relate to societal challenges or goals, focusing on contributions towards the welfare of communities and the environment.

Profit-Leverage Effect

A financial concept indicating that a reduction in purchasing costs can have a more significant impact on a company's profit than an equivalent increase in sales.

Cost of Purchases

The total expense incurred in acquiring goods and services, including price, shipping, and handling, among other costs.