How Have the Recent Increases in the Price of Gasoline

question 105

Multiple Choice

How have the recent increases in the price of gasoline affected the market for hybrid cars?

• A) The demand has increased, increasing the equilibrium price and quantity of hybrid cars.
• B) The supply has increased, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
• C) The demand has increased, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
• D) The demand and supply of hybrid cars have both increased in response to changing gas prices, so the equilibrium quantity has definitely decreased, but the effect on price cannot be determined without more information.

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Definitions:

Discretionary Spending

Expenditures made at the discretion of a business or individual, which are non-essential and can be adjusted or eliminated.

Accounting-Based Incentives

Compensation schemes for employees or executives that are tied to accounting performance measures, such as earnings or return on assets.

Executive Compensation

The total remuneration package provided to executives, including salary, bonuses, shares, options, and other benefits.

Discretion Over

Having the authority to make decisions and judgments in certain situations without the need for specific authorization.