One reason the U.S.government might subsidize research of an alternative to crude-oil based gasoline is that
A) more substitutes will reduce the price of crude-oil based gasoline.
B) more substitutes will increase the elasticity of crude-oil based gasoline.
C) more substitutes will reduce the impact of supply shocks on the price of crude-oil based gasoline.
D) Any or all of the above.

Question

Quizplus · Accepted Answer

Subsidizing research for alternatives to crude-oil based gasoline can lead to more substitutes, which can reduce the price of crude-oil based gasoline by increasing supply and competition. It can also increase the elasticity of demand for crude-oil based gasoline, as consumers have more alternatives. Additionally, more substitutes can mitigate the impact of supply shocks on the price of crude-oil based gasoline by providing alternative sources of energy, making the market less vulnerable to fluctuations in crude oil supply.

One Reason the U