Question

The federal government announces a new gasoline tax of $1 per gallon that will be imposed...

The federal government announces a new gasoline tax of $1 per gallon that will be imposed tomorrow at noon. What would happen in the market before noon tomorrow?

Group of answer choices

A decrease in the demand for gasoline and surpluses of gasoline

An increase in the demand for gasoline and shortages of gasoline

A decrease in the demand for gasoline and shortages of gasoline

An increase in the demand for gasoline and surpluses of gasoline

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Homework Answers

Answer #1

A shortage arises in a market when the demand exceeds the supply

A surplus arises in a market when supply exceeds demand

When the Federal government announces the gasoline tax of $1 per gallon it means the people will know that from tomorrow it will be get higher price this will lead to a rush by a lot of people and a very high increase in the demand of gasoline due to which demand of gasoline increases but supply is limited.

This will cause the shortage of gasoline in the market

So the correct answer here is option B

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