A Decrease in the Price of Gasoline Shifts the Demand

question 118

Multiple Choice

A decrease in the price of gasoline shifts the demand for auto batteries to the

• A)left, because gasoline and auto batteries are substitutes.
• B)left, because gasoline and auto batteries are normally used together.
• C)right, because gasoline and auto batteries are substitutes.
• D)right, because gasoline and auto batteries are normally used together.

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Definitions:

Equilibrium Price

The price point at which the quantity of goods demanded equals the quantity of goods supplied, without any external intervention.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to market balance.

Price Gouging

Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair, often during a demand spike caused by a crisis.

Price Floor

A government- or authority-imposed minimum price that can be charged for a good or service, typically above the equilibrium market price to maintain a fair or sustainable market condition.