Question

What would happen to the demand curve for gasoline if there was an increase in the price of gasoline, everything else held constant?

A.movement to the right along the same demand curve
B.movement to the left on the same demand curve
C.an upward shift (increase) of the demand curve
D.a downward shift (decrease) of the demand curve

Answer 1

(D) An increase in gasoline price, with all else constant, leads to a decrease in the quantity demanded, resulting in a movement along the existing demand curve.

Step-by-step explanation:

The demand curve moves in the same direction if the price of gasoline rises while all other variables remain same. This adjustment implies that consumers will demand a smaller quantity of gasoline at the higher price point, adhering to the law of demand. However, this movement doesn't shift the entire demand curve; rather, it demonstrates a change in quantity demanded along the existing curve due to the price alteration.

Other factors like income, preferences, or substitutes remaining constant means the demand curve's position remains unchanged; it's solely the price change influencing the quantity demanded along the curve.