Question

Pump prices slide as crude oil falls to​ six-year low The average price for regular gasoline at U.S. pumps fell almost 4 cents in March to​ $2.50 a gallon. The price of crude oil dropped to​ $43.46 per barrel on March​ 17, the lowest since March 2009. ​Source: Bloomberg Business​, March​ 23, 2015 Explain the effect of a lower crude oil price on the supply of gasoline. A fall in the price of crude oil will​ ______.

Answer 1

lower the cost of producing gasoline and increase the supply of gasoline

Step-by-step explanation:

Crude oil is an input needed in the production of gasoline. If the price of crude oil falls, it would become cheaper to make gasoline and therefore the supply of gasoline would increase.