Solved

During October and November 2008, Gasoline Prices Were Falling Dramatically

Question 397

Multiple Choice

During October and November 2008, gasoline prices were falling dramatically, making travel by car less expensive but air travel prices were as high as ever. What is true about consumer preferences, possibilities, or choices?


A) The relative price of air travel in terms of travelling by car decreases.
B) If travelling by car is a normal good, both the substitution and income effects would lead to a decrease in travelling by car.
C) The consumers' budget line would shift outward and its slope would not change.
D) If air travel is a normal good, both the substitution and income effects would lead to an increase in air travel.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents