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When Gasoline Prices Are High, Oil Refiners Have an Incentive

question 243

Multiple Choice

When gasoline prices are high, oil refiners have an incentive to pull every last drop of gasoline out of a barrel of crude. This implies that an increase in the demand for gasoline will cause a(n) ______ quantity supplied of gasoline and ______ the supply of the remaining crude oil products.


Definitions:

Cash Discounts

These are deductions allowed by sellers on invoice amounts if the buyer pays promptly within a specified period, serving as an incentive for early payment.

Perpetual Inventory System

An inventory management method where records are continuously updated to reflect buys, sells, and stock levels in real-time.

Gross Method

An accounting practice where discounts for early payment are not considered until they are actually taken by the purchaser.

Credit Terms

Conditions under which credit is extended by a seller to a buyer, including the repayment period, interest rate, and penalties for late payment.

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