Question

Consider the following factor and indicate whether it increases or decreases the equilibrium price of gasoline and the equilibrium quantity of gasoline sold. In this problem, assume that gasoline is a normal good.
When the number of sellers decreases, the


Choose one:
A. supply curve shifts to the right.
B. demand curve shifts to the right.
C. demand curve shifts to the left.
D. supply curve shifts to the left.


As a result,


Choose one:
A. price decreases and quantity decreases.
B. price decreases and quantity increases.
C. price increases and quantity decreases.
D. price increases and quantity increases.

Answer 1

When there are less sellers, the demand curve shifts to the right.

As a result, price increases and quantity decreases.

Explanation:

Say there’s two gas stores. One shuts down. The gas store that is still opened will gain all of the shut down gas store’s business. This means there will be a high demand and the curve shifts right. Because of the high demand, there will be a decrease in goods available (quantity decrease). With limited goods, the gas store will have no choice but to raise the price.