Let D₀ and S₀ Be the Initial Demand and Supply

question 31

Multiple Choice

Let D₀ and S₀ be the initial demand and supply curves for gasoline. Let P₀^* and Q₀^* be the initial equilibrium in this market. The war in Iraq comes to an end. Iran and Afghanistan lay pipes to generate more oil. US and Venezuela enter an era of friendship. Which ONE of the following correctly captures the effect of this change on the market for gasoline?

• A) Both equilibrium quantity and price will increase
• B) Both equilibrium quantity and price will decrease
• C) Equilibrium quantity will increase, but equilibrium price will decrease
• D) Equilibrium quantity will decrease, but equilibrium price will increase

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Definitions:

Limitations

Restrictions or constraints that limit the scope, effectiveness, or value of something, often acknowledged in research or project planning.

Setting The Price

The process of determining the selling price of a product or service, considering factors such as cost, demand, competition, and market conditions.

Principle Of Communication

Fundamental guidelines or truths that guide how communication is effectively exchanged between individuals or groups, ensuring clarity, understanding, and effectiveness.

Mechanical Engineering

The branch of engineering that applies the principles of physics and materials science for the design, analysis, manufacturing, and maintenance of mechanical systems.