Gasoline and Ethanol Are Substitute Fuels

question 25

Multiple Choice

Gasoline and ethanol are substitute fuels.If the government increases taxes on gasoline,this will cause a(n) :

• A) decrease in deadweight loss in the market for gasoline and an increase in the price of ethanol.
• B) increase in deadweight loss in the market for gasoline and a decrease in demand for ethanol.
• C) increase in deadweight loss in the market for gasoline and an increase in the price of ethanol.
• D) decrease in deadweight loss in the market for gasoline and an increase in demand for ethanol.
• E) increase in deadweight loss in the market for gasoline and a decrease in the price of ethanol.

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Definitions:

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