Gasoline and bicycles are substitutes in consumption. Suppose we increase the federal gasoline tax to $1 per gallon. What are the initial changes that result from the tax as these markets adjust to a new general equilibrium?
A) Gasoline price rises, demand for bicycles shift s leftward.
B) Gasoline price rises, demand for bicycles shifts rightward.
C) Gasoline price rises, move downward along bicycle demand curve.
D) Gasoline price rises, move upward along bicycle demand curve.
B
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Goods used to produce other goods are known as
a. transitional goods b. durable goods c. nondurable goods d. services e. intermediate goods
The slope of money demand curve illustrates the idea that there is
a) a positive relationship b/w the interest rate and the quantity of money demanded b) a positive relationship b/w the price level and the quantity of money demanded c) a negative relationship b/w the interest rate and the quantity of money demanded d) a negative relationship b/w the value of transactions and the quantity of money demanded e) none of the above
Reflecting the theories of Smith, Ricardo, and Heckscher-Ohlin, free trade permits ______, which allows a country to manufacture and export in those areas where they have a comparative advantage
Fill in the blank(s) with the appropriate word(s).
What are transaction costs? What are some ways in which society reduces transaction costs?
What will be an ideal response?