Suppose the Demand for Large (And Therefore High-Gasoline Consumption) Cars

question 113

Multiple Choice

Suppose the demand for large (and therefore high-gasoline consumption) cars decreases sharply during an energy crisis. The most likely market adjustment would be

• A) a sharp rise in the price of large cars in the short run as people rush to purchase these vehicles before producers cut back on manufacturing them.
• B) a moderate increase in short-run prices, followed by a larger long-run price increase as the supply of large cars is depleted.
• C) lower short-run prices, which will lead to an expansion in the number of large cars sold.
• D) a decrease in the price of large cars in the short run, leading to a reduction in output, which will moderate the price decline in the long run.

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Definitions:

Hypothetical Proposition

A conditional statement expressing a hypothesis and a consequence.

Hypothetical Proposition

A proposition or statement that is conditional and asserts a possible outcome if certain conditions are met.

Antecedent

In logic, the first half of a hypothetical proposition; in general, any preceding event, condition, or cause.

Consequent

In logic, the consequent is the second part of a conditional statement, typically following "then." For example, in "If P, then Q," Q is the consequent.