An increase in the price of crude oil,a basic input into the production of gasoline,is likely to

Question

Quizplus · Accepted Answer

An increase in the price of crude oil is likely to put upward pressure on the price of gasoline because crude oil is a major input in the production of gasoline. As the cost of producing gasoline increases, the sellers of gasoline will increase the prices to maintain their profit margins. Therefore, an increase in the price of crude oil leads to an increase in the price of gasoline.

An Increase in the Price of Crude Oil,a Basic Input