What will happen to the equilibrium price and quantity of gasoline if more vehicles are used and,at the same time,the extraction of oil becomes more costly?

Question

Quizplus · Accepted Answer

The increase in the number of vehicles being used will lead to an increase in the demand for gasoline, which will cause the equilibrium price to rise. On the other hand, if the extraction of oil becomes more costly, the supply of gasoline will decrease, which will also cause the equilibrium price to rise. The effect on quantity is ambiguous because although the increase in demand will lead to an increase in quantity, the decrease in supply will cause a decrease in quantity. Therefore, the price will rise and the effect on quantity is ambiguous.

What Will Happen to the Equilibrium Price and Quantity of Gasoline