Which of the Following Statements About the Consumers' Responses to Rising

question 5

Multiple Choice

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

• A)About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
• B)About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.
• C)About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
• D)Because gasoline is a necessity,consumers do not decrease their quantity demanded in either the short run or the long run.

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Definitions:

Dividends Account

An account used to record the payment of dividends, which are distributions of a corporation's earnings to its shareholders.

Expense

Costs incurred in the process of earning revenue, typically including cost of goods sold, selling, general, and administrative expenses.

Cash Account

An account that records all transactions involving cash receipts and cash payments, including operating, investing, and financing activities.

T Account

A graphical representation used in double-entry bookkeeping to show the increases and decreases in an account, characterized by a T shape.