Answer to Question #10399 in Macroeconomics for Andrew Rumsey
Suppose there is an increase in the price of gasoline. What would occur in the market for SUVs?
a. decrease in price, decrease in quantity of trade
b. increase in price, decrease in quantity of trade
c. increase in price, increase in quantity of trade
d. decrease in price, increase in quantity of trade
The right answer is A) Because of high utilization of fuel by SUV's their expluatation costs are expected to grow, so the demand for them is expected to fall, and producers will probably decrease prices to stop it.