What Effect Would a Rise in the Price of Gasoline

question 25

Multiple Choice

What effect would a rise in the price of gasoline have on automakers?

• A) Automakers would produce more gas-efficient cars.
• B) Automakers would decrease the price of gas-efficient vehicles.
• C) Automakers would spend more money to market large vehicles.
• D) A rise in the price of gasoline would not affect an automaker's supply decisions.

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Definitions:

Fair Value

The agreed-upon price for transferring ownership of an asset or the cost to pass on a liability in a formalized exchange within the marketplace at the time of measure.

Maintenance Expenditures

Funds spent on keeping property, equipment, or machinery in operating condition.

Legal Provisions

Conditions or requirements stated in legal documents, such as laws or contracts.

Equity in Subsidiary Earnings

The portion of income attributable to the parent company from its investment in subsidiaries, after intercompany transactions have been eliminated.