A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for large cars, causing their prices to rise. These statementsA) are essentially correct.B) contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand.C) contain one error; the lower gasoline prices would increase the quantity demanded of large cars, not the demand.D) contain two errors; the lower gasoline prices would cause the quantity of gasoline demanded (rather than the demand) to increase, and the lower gasoline price would cause an increase in quantity demanded (rather than the demand) for large cars.

Question

A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for large cars, causing their prices to rise. These statementsA)  are essentially correct.B)  contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand.C)  contain one error; the lower gasoline prices would increase the quantity demanded of large cars, not the demand.D)  contain two errors; the lower gasoline prices would cause the quantity of gasoline demanded (rather than the demand)  to increase, and the lower gasoline price would cause an increase in quantity demanded (rather than the demand)  for large cars.

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Final Answer : B, Explanation :  The lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand. Demand refers to the entire demand curve, while quantity demanded refers to a movement along the curve due to a price change.

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