When the Price of Gasoline Increases, the Amount of Money

question 23

Multiple Choice

When the price of gasoline increases, the amount of money available to spend on everything else (including gasoline) falls. This effect is known as the _____ effect.

• A) income
• B) marginal
• C) opportunity
• D) substitution

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Definitions:

Production Possibility Frontier

A curve demonstrating the maximum potential output levels of two goods or services an economy can achieve when all resources are efficiently utilized.

Economic

Relating to the principles and practices of economics or the economy; the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.

Entrepreneur

An individual who starts and runs a new business, taking on financial risks in the hope of profit.

Henry Ford

An American industrialist and the founder of Ford Motor Company, known for revolutionizing the automotive industry through the introduction of mass production techniques.