Consider the market for ride-on lawn mowers and the recent increases in the price of oil. The recent increase in the price of oil makes it more expensive to manufacture ride-on lawn mowers. An increase in the price of oil also makes it more expensive to run a ride-on mower. What is likely to happen to equilibrium price and quantity of lawn mowers as a result in the changing price of oil? Supply and demand will both:
A. increase, increasing equilibrium price and having an indeterminate effect on quantity.
B. increase, increasing equilibrium quantity and having an indeterminate effect on price.
C. decrease, increasing equilibrium price and having an indeterminate effect on quantity.
D. decrease, decreasing equilibrium quantity and having an indeterminate effect on price.
Answer: D
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