An increase in the price of cars will have what effect on the equilibrium price and quantity of gasoline?
A)Price will increase,quantity will decrease
B)Price will increase,quantity will increase
C)Price will decrease,quantity will decrease
D)Price will decrease,quantity will increase
E)The new equilibrium price and quantity can not be determined

Question

Quizplus · Accepted Answer

An increase in the price of cars is likely to decrease the demand for cars, leading to a decrease in the demand for gasoline (a complementary good). This decrease in demand for gasoline will lead to a lower equilibrium price and quantity for gasoline.

An Increase in the Price of Cars Will Have What