Gasoline,a derivative of oil,is a large part of transportation costs for many producers.If the price of oil increases at the same time that incomes fall for many consumers,one would expect the equilibrium price of many normal goods to _____,while their equilibrium quantities would _____.
A)fall;rise
B)fall,rise,or stay the same;decrease
C)decrease;fall,rise,or stay the same
D)fall;fall

Question

Quizplus · Accepted Answer

When the price of oil increases, the cost of production for many goods rises, potentially increasing prices. However, if consumer incomes fall, demand for normal goods decreases, which can lower prices. The net effect on price is uncertain, but the quantity is likely to decrease due to reduced demand.

Gasoline,a Derivative of Oil,is a Large Part of Transportation Costs