Gasoline is produced from crude oil. Ceteris paribus, if the supply of crude oil falls, the equilibrium price of gasoline will _____ and the equilibrium quantity will _____.

Question

Quizplus · Accepted Answer

When the supply of crude oil falls, the cost of producing gasoline increases, leading to a higher equilibrium price for gasoline. At the same time, the quantity of gasoline that can be produced and supplied to the market decreases, leading to a lower equilibrium quantity.

Gasoline Is Produced from Crude Oil