Answer to Question #10399 in Macroeconomics for Andrew Rumsey

Question

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

Answer 1

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.