Question

Gasoline, a derivative of oil, is a large part of transportation costs for many producers. If the price of oil increases at the same time that incomes fall for many consumers, one would expect the equilibrium price of many normal goods to _____, while their equilibrium quantities would _____.

a. Fall, rise, or stay the same; decrease
b. Fall; rise
c. Decrease; fall, rise, or stay the same
d. Fall; fall

Answer 1

A

Step-by-step explanation:

As a result of the rise in price of oil, the cost of production increases and this reduces supply. as a result price increases and quantity decreases.

Normal goods are goods that are goods whose demand increases when income increases and falls when income falls.

As a result of the fall in income, the demand for goods would fall. This would lead to a reduction in price and quantity

taking this two effects together, there would be a fall in quantity and an indeterminate change in price