Suppose the Price of Oil Has Recently Increased, Making It

question 152

Multiple Choice

Suppose the price of oil has recently increased, making it more expensive to manufacture ride-on lawn mowers. This oil price increase also makes it more expensive to run a ride-on mower. What is likely to happen to the market for ride-on lawn mowers as a result in the changing price of oil?

• A) Supply and demand will increase, increasing equilibrium quantity and having an indeterminate effect on price.
• B) Supply and demand will decrease, decreasing equilibrium quantity and having an indeterminate effect on price.
• C) Supply and demand will increase, increasing equilibrium price and having an indeterminate effect on quantity.
• D) Supply and demand will decrease, increasing equilibrium price and having an indeterminate effect on quantity.

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Definitions:

Public Choice Theory

The economic analysis of government decision making, politics, and elections.

Government Decision Making

The process by which officials of a government choose options and take actions affecting the country or a section of its population.

Collective Economics

Practices and principles that focus on the management and optimization of resources for the benefit of a community or group rather than individuals.

Public Choice Theory

A theory that applies economic principles to political science, analyzing how public decisions are made and their impact on society.