Suppose the price of gasoline and other petroleum products decline sharply. Which of the following will most likely occur as a result of the lower petroleum prices?

Question

Quizplus · Accepted Answer

When the prices of gasoline and other petroleum products decline sharply, consumers tend to opt for larger, more powerful automobiles, which are generally less fuel-efficient than smaller ones. This is because consumers view lower fuel prices as an opportunity to save money on gasoline in the long run, even if it means buying a larger vehicle that consumes more gas. As such, there is likely to be an increase in demand for larger cars and trucks, which will likely further increase overall demand for gasoline and petroleum products.

Suppose the Price of Gasoline and Other Petroleum Products Decline