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Gasoline and bicycles are substitutes in consumption. Suppose we increase federal gasoline tax to $1 per gallon. What are the initial changes that result from
Gasoline and bicycles are substitutes in consumption. Suppose we increase federal gasoline tax to $1 per gallon. What are the initial changes that result from the tax as these markets adjust to a new general equilibrium?
A) Gasoline price rises, and there is a move downward along the bicycle demand curve
B) Gasoline price rises, and there is a move upward along the bicycle demand curve
C) Gasoline price rises, demand for bicycles shifts rightward
D) Gasoline price rises, demand for bicycles shifts leftward
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