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Figure: Demand and Supply of Gasoline
-(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. When the supply curve shifted from the initial equilibrium, the new intersection of supply and demand has a price of _____ and quantity of 400. This supply shift could have resulted from _____.
A)$1.50; an increase in consumers' income
B)$1.50; an improvement in refining technology
C)$2.00; an increase in the number of buyers
D)$2.00; an increase in consumers' income

Question

Use the following to answer questions:
Figure: Demand and Supply of Gasoline 
-(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. When the supply curve shifted from the initial equilibrium, the new intersection of supply and demand has a price of _____ and quantity of 400. This supply shift could have resulted from _____.
A)$1.50; an increase in consumers' income 
B)$1.50; an improvement in refining technology 
C)$2.00; an increase in the number of buyers 
D)$2.00; an increase in consumers' income

Quizplus · Accepted Answer

The new intersection of supply and demand has a price of $1.50 and quantity of 400. This new equilibrium point could have only resulted from a rightward shift of supply, which could have been caused by an improvement in refining technology, as seen in the graph. An increase in consumers' income or number of buyers would have shifted the demand curve, which would have resulted in a different price and quantity.

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