Answer :
Final answer:
Higher gasoline prices increase the operating costs for the pest control service, prompting the owner to raise monthly fees to maintain profit margins. Similar cost impacts are observed in other service delivery businesses.
Explanation:
The market for pest control services is affected by the increase in gasoline prices because it raises the operating costs for providing those services. When the owner of the pest control service has to pay more for gasoline, he needs to raise the monthly service fee to cover these higher costs. This scenario is similar to how the cost of gasoline impacts other businesses with service delivery components; higher gasoline prices lead to increased costs of operation, and consequently, businesses might increase prices or reduce the scope of their services to maintain profitability. If these costs are not passed on to customers, the service provider might suffer from decreased profit margins, which could affect service quality or the business's sustainability. Conversely, if gasoline prices were to decrease, the pest control company might be able to lower their service fees or increase the range of services offered.
Answer:
C) There is a decrease in the supply of pest control services.
Explanation:
When the price of gasoline goes up, the supplier of pest control services will be forced to reduce supply. Due to limited resources he will not be able to keep up previous level of supply to his customers.