Question

Other things equal, which of the following might shift the demand curve for gasoline to the left?

A. The discovery of vast new tar sands oil reserves in Canada
B. The development of a low-cost electric automobile
C. An increase in the price of train and air transportation
D. A large decline in the price of automobiles

Answer 1

The development of a low-cost electric automobile could lead to a leftward shift in the demand curve for gasoline by decreasing gasoline consumption in favor of electric vehicles, resulting in a lower equilibrium price and quantity for gasoline.

Step-by-step explanation:

Among the options provided, the development of a low-cost electric automobile might shift the demand curve for gasoline to the left. A significant technological advancement in transportation, such as an accessible electric vehicle, can cause consumers to opt for electric cars over traditional gasoline-powered ones. This switch would reduce the need for gasoline, as more fuel-efficient electric cars imply less reliance on gasoline for transportation. Consequently, this decrease in gasoline demand leads to a leftward shift in the demand curve, which, in turn, results in a lower equilibrium price and quantity of gasoline.