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Gasoline and Ethanol Are Substitute Fuels

Question 96

Multiple Choice

Gasoline and ethanol are substitute fuels.If the government increases taxes on gasoline,this will cause a(n) :


A) decrease in deadweight loss in the market for gasoline and an increase in the price of ethanol.
B) increase in deadweight loss in the market for gasoline and a decrease in demand for ethanol.
C) increase in deadweight loss in the market for gasoline and an increase in the price of ethanol.
D) decrease in deadweight loss in the market for gasoline and an increase in demand for ethanol.
E) increase in deadweight loss in the market for gasoline and a decrease in the price of ethanol.

Correct Answer:

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