Question

In 1973, Arab countries imposed an oil embargo on the United States, and consumer preferences favored automobiles over public transportation. What happened to the supply and demand curves and the equilibrium price and quantity in the gasoline market during this time period?

a) The demand for gasoline decreased, shifting the curve to the left, while the supply curve shifted to the right. The equilibrium quantity increased, but the equilibrium price change cannot be determined.
b) The demand for gasoline decreased, shifting the curve to the left, while the supply curve also shifted to the left. The equilibrium price increased, but the equilibrium quantity change cannot be determined.
c) The supply of gasoline decreased, shifting the curve to the left, while the demand curve shifted to the right. The equilibrium quantity increased, but the equilibrium price change cannot be determined.
d) The supply of gasoline decreased, shifting the curve to the left, while the demand curve shifted to the right. The equilibrium price increased, but the equilibrium quantity change cannot be determined.

Answer 1

During the 1973 oil embargo and with consumer preferences shifting towards automobiles, the supply and demand curves for gasoline shifted to the left, resulting in a decrease in the equilibrium price and quantity in the gasoline market.

Step-by-step explanation:

In 1973, Arab countries imposed an oil embargo on the United States, which led to a decrease in the supply of oil and gasoline. At the same time, consumer preferences favored automobiles over public transportation, leading to a decrease in demand for gasoline. As a result, both the supply and demand curves for gasoline shifted to the left. The equilibrium price and quantity in the gasoline market during this time period would both decrease, but the exact changes in price and quantity cannot be determined without further information.