Gasoline prices in the United States decreased significantly between 2008 and 2009. A decrease in the price of gasoline, holding other things constant, will cause which of the following to occur?

a) increase the demand for gasoline

b) decrease the demand for gasoline

c) increase the quantity of gasoline demanded

d) decrease the quantity of gasoline demanded

Question

Business

Salma Navarro

21 August, 07:20

Gasoline prices in the United States decreased significantly between 2008 and 2009. A decrease in the price of gasoline, holding other things constant, will cause which of the following to occur?

a) increase the demand for gasoline

b) decrease the demand for gasoline

c) increase the quantity of gasoline demanded

d) decrease the quantity of gasoline demanded

+4

Answers (1)

Know the Answer?

Alissa · Answer 1

Option (c) is correct.

Explanation:

Law of demand states that other things remains the same if there is an increase in the price of a good then as a result the quantity demanded for that good decreases and on the other hand, if there is a fall in the price of a good then as a result the quantity demanded for that good increases.

In our case, if there is a fall in the price of gasoline then as a result the quantity demanded for gasoline increases. There is a negative relationship between the price of the good and quantity demanded.