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28. (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. A factor that may have changed supply from S, to S, is: A) better technology in the production of gasoline. B) increased demand. C) lower labor productivity in gasoline production. D) increased prices of substitutes for gasoline.

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Jean Keeling
Jean KeelingLv2
1 Sep 2018
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Related questions

Imagine the state of North Carolina decides to increase the gasoline tax. Who will pay for this tax increase in the short run? A. Consumers, because demand for gasoline is elastic. Suppliers, because consumers do not have good substitutes for gasoline. Consumers, because demand for gasoline is inelastic. D. Suppliers, because it is easy to obtain gasoline supplies from other states.

Step 1
Analyze gasoline price hike statistics in the following scenario.
In June 2008, the U.S. retail gas price jumped from $3 to $4 a gallon.

This is a 33% increase in price from January 2008.

During that time, the total quantity of gasoline purchased fell by 3%.

Supplies of gasoline produced also decreased from 1 million barrels to 800,000 barrels.

No viable substitute has been created to replace gasoline.

Step 2
Calculate the price elasticity of gasoline.
In a one- to two-page (250-500-word) paper, address the following. Be sure to show all work.

Calculate the price elasticity of demand for gasoline.

Calculate the elasticity of supply using the information provided.

Calculate the changes in consumer and producer surplus.

Because there is no viable substitute for gasoline at this time, what can you say about the cross-elasticity and income elasticity of supply and demand for gasoline?

Is the demand for gasoline elastic, inelastic, perfectly elastic or inelastic, or unit elastic?

A.How do Minimum Wage Laws affect the equilibrium in the Labor Market?

B. For your selected product, if the government places a mandated price ABOVE the equilibrium price, how would this affect the market equilibrium?

C. Would you rather have the forces of demand and supply determine the price of gasoline, or would you prefer a government-mandated price ceiling? What problems would a price ceiling on gasoline bring in this market?

D. In conclusion, there are two different schools of thought on how to lower gasoline prices and reduce U.S. dependence on foreign oil. One is to increase SUPPLY of oil (drilling offshore), and the other is to decrease DEMAND (finding alternatives to oil). Can you graph how these two changes will bring about lower gas prices? Which one do you support?

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