Multiple Choice
Let D0 and S0 be the initial demand and supply curves for gasoline. Let P0* and Q0* be the initial equilibrium in this market. The war in Iraq comes to an end. Iran and Afghanistan lay pipes to generate more oil. US and Venezuela enter an era of friendship. Which ONE of the following correctly captures the effect of this change on the market for gasoline?
A) Both equilibrium quantity and price will increase
B) Both equilibrium quantity and price will decrease
C) Equilibrium quantity will increase, but equilibrium price will decrease
D) Equilibrium quantity will decrease, but equilibrium price will increase
Correct Answer:
Verified
Correct Answer:
Verified
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