Trucking Business in the United States

Answer the following questions to check your understanding of the story.

How does a rise in the price of diesel change truck transportation service costs in the short run?

A rise in the price of diesel _____________.

a) increases variable cost and fixed cost, but does not change marginal cost

b) decreases variable cost and marginal cost, but does not change fixed cost

c) decreases fixed cost and marginal cost, but does not change variable cost

d) increases variable cost and marginal cost, but does not change fixed cost

How does a rise in the price of diesel change the price and output of truck transportation services?

The quantity of truck transportation services _________, and the price __________.

a) decreases; falls

b) increases; rises

c) increases; falls

d) decreases; rises

How does a rise in diesel prices affect consumer and producer surplus in the market for truck transportation services?

Consumer surplus __________ and producer surplus __________.

a) increases; increases

b) decrease; increases

c) decreases; decreases

d) increases; decreases