Suppose the equilibrium price of a gallon of gasoline drops from $4.00 to $3.85 and the equilibrium quantity increases from 365 millions of gallons per week to 372 millions of gallons per week.These changes can be the result of

Question

Quizplus · Accepted Answer

A decrease in price and an increase in quantity can only occur when the supply curve shifts to the right. This means that producers are offering more gasoline at every price level, resulting in a lower equilibrium price and a higher equilibrium quantity. Therefore, the correct choice is A) an increase in supply.

Suppose the Equilibrium Price of a Gallon of Gasoline Drops