Final answer:
The shift in the demand curve for gasoline suggests an increase in demand, which among the given options, could most plausibly be caused by an increase in income, leading to higher spending capability.
Step-by-step explanation:
The shift in the demand curve for gasoline from P=$10-Q to P=$12-Q indicates an increase in demand. This could be due to various factors, but among the provided options, an increase in income is the most likely cause. When incomes increase, people have more money to spend, which can lead to an increase in the quantity of gasoline demanded at any given price point, represented by a rightward shift in the demand curve.
An increase in car prices, a decrease in steel prices, and an increase in auto workers’ wages would likely affect the supply side, not the demand side. The increase in car prices could result in a decreased demand for cars and consequently less demand for gasoline, while changes in steel prices or wages would more likely affect the supply curve of cars or gasoline due to changes in production costs.
The change in the demand curve for gasoline from P=$10-Q to P=$12-Q indicates an increase in price for gasoline. This increase in price could be caused by a decrease in supply or by an increase in demand. In this case, since the demand curve has shifted, it suggests a change in demand. Therefore, the correct answer to the question is c) An increase in income.
An increase in income leads to an increase in purchasing power, which in turn leads to an increase in the demand for goods and services, including gasoline. As people have more disposable income, they are more likely to drive cars and consume more gasoline. This increased demand for gasoline shifts the demand curve to the right, resulting in a higher equilibrium price of gasoline.