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Assume the Price of Gasoline Triples

question 30

Multiple Choice

Assume the price of gasoline triples. What will likely happen to the demand for small cars? The demand curve will shift to the ______ and demand will ______.


Definitions:

Maximizing Profit

The process by which a company determines the optimal level of production and pricing to achieve the highest possible profit.

Purely Competitive

Refers to a market structure characterized by a large number of buyers and sellers, where all firms offer identical products and there is free entry and exit.

Profit-maximizing Level

The output level at which a firm achieves the highest possible profit.

Short-run

In economics, a period wherein at least one input (like capital) is fixed, and firms can only adjust variable inputs (like labor).

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