As a result of increased tensions in the Middle East, oil production is down by 1.21 million barrels per day – a 5 percent reduction in the world's supply of crude oil. Explain the likely impact of this event on the market for gasoline and the market for small cars.The gasoline market will have:higher equilibrium prices and lower equilibrium quantity.higher equilibrium prices and higher equilibrium quantity.lower equilibrium prices and higher equilibrium quantity.lower equilibrium prices and lower equilibrium quantity.The small car market will have:higher equilibrium prices and lower equilibrium quantity.higher equilibrium prices and higher equilibrium quantity.lower equilibrium prices and lower equilibrium quantity.lower equilibrium prices and higher equilibrium quantity.

Complementary goods are products or services that tend to be consumed or used together because they…

Answered: As a result of increased tensions in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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As a result of increased tensions in the Middle East, oil production is down by 1.21 million barrels per day – a 5 percent reduction in the world's supply of crude oil. Explain the likely impact of this event on the market for gasoline and the market for small cars.

The gasoline market will have:

higher equilibrium prices and lower equilibrium quantity.
higher equilibrium prices and higher equilibrium quantity.
lower equilibrium prices and higher equilibrium quantity.
lower equilibrium prices and lower equilibrium quantity.

The small car market will have:

higher equilibrium prices and lower equilibrium quantity.
higher equilibrium prices and higher equilibrium quantity.
lower equilibrium prices and lower equilibrium quantity.
lower equilibrium prices and higher equilibrium quantity.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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