Crude oil is a very important factor of production used in the production of gasoline.If the price of crude oil rises, we would expect the

Question

Quizplus · Accepted Answer

An increase in the price of crude oil would lead to an increase in the cost of producing gasoline, leading to a decrease in supply. This decrease in supply would lead to an increase in the price of gasoline (as consumers are willing to pay more for a scarce good) and a decrease in the equilibrium quantity of gasoline. Therefore, the correct answer is E) price of gasoline to rise due to a decrease in supply.

Crude Oil Is a Very Important Factor of Production Used