When gasoline prices fall, the demand for alternative fuel cars likely:
A) falls, lowering their equilibrium price and raising equilibrium quantity.
B) rises, raising their equilibrium price and quantity.
C) falls, raising their equilibrium price and lowering equilibrium quantity.
D) falls, lowering their equilibrium price and quantity.

Question

Quizplus · Accepted Answer

When gasoline prices fall, consumers are less incentivized to purchase alternative fuel cars, leading to a decrease in demand. This decrease in demand results in a lower equilibrium price and quantity for alternative fuel cars.

When Gasoline Prices Fall, the Demand for Alternative Fuel Cars