The Market for Gasoline in May Is in Equilibrium, at a Market

question 241

Multiple Choice

The market for gasoline in May is in equilibrium, at a market clearing price of $2.50 per gallon. After Memorial Day, the demand curve for gasoline increases, which causes

• A) the demand curve for gasoline to shift to the right, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to rise.
• B) the demand curve for gasoline to shift to the right, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to fall.
• C) the demand curve for gasoline to shift to the left, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to rise.
• D) the demand curve for gasoline to shift to the left, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to fall.

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Definitions:

Marginal Productivity

The additional output that results from using one more unit of a particular input, holding all other inputs constant.

Resource Price

The cost associated with acquiring resources or inputs needed for production, such as raw materials, labor, and capital.

Anaconda Smelting Company

A historical company involved in the process of melting and refining metal ore to separate it from its impurities.

Air Pollution

The presence of harmful substances in the air that can cause health problems for humans, damage the environment, and contribute to climate change.