During the 1970s,OPEC's Output Restrictions Caused Gasoline Prices to Increase

question 63

Multiple Choice

During the 1970s,OPEC's output restrictions caused gasoline prices to increase sharply.Coincidentally,demand for gas-guzzling cars fell.A likely explanation for these observations is that gasoline and cars had a ________ elasticity of demand that was ________.

• A)cross; negative
• B)cross; positive
• C)income; negative
• D)income; positive
• E)price; negative

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Definitions:

Production Capacity

The maximum output that a company can produce in a given period under normal conditions.

Variable Product Cost

Variable product cost includes costs that vary directly with the production volume, such as raw materials and direct labor.

Markup Percentage

The proportion added onto the purchase price of products to encompass operational costs and earnings.