If Government Regulations Increase the Cost of Producing Gasoline While

question 146

Multiple Choice

If government regulations increase the cost of producing gasoline while at the same time government regulations reduce the cost of driving a relatively inefficient sport utility vehicle (SUV) ,

• A) the supply of gasoline is expected to increase.
• B) the demand for gasoline is expected to decrease.
• C) the price of gasoline is expected to increase, whereas the total consumption of gasoline can increase, decrease, or stay the same.
• D) the supply of gasoline is expected to decrease.

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Definitions:

Futures Price

The agreed-upon price for a financial instrument or commodity to be sold or bought at a future date, used primarily in futures contracts trading.

Convergence Property

The characteristic of a mathematical series or economic model to approach a limit or a stable point over time.

Maturity

The date on which the principal amount of a bond, loan, or other financial instrument becomes due and is to be paid in full.

Marking To Market

The process of updating the value of a financial instrument to reflect its current market value, rather than its purchase price or book value.