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Gasoline prices increase by 50 percent and other things remain the same. As a result, there is:

A) an increase in the demand for gasoline.
B) a decrease in the demand for gasoline.
C) no change in the quantity of gasoline demanded.
D) a decrease in the quantity of gasoline demanded.
E) More information is needed to determine if the demand for gasoline increases or decreases.

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Sonal Bahl
Sonal BahlLv10
9 Dec 2020

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Related questions

Suppose that in the perfectly competitive market for the normal good gasoline there is a simultaneous decrease in the income of consumers who purchase gasoline and an increase in the price of oil (an input used in producing gasoline). With these changes, we expect A. an increase in price of gasoline and an increase in the quantity of gasoline sold. B. an increase in the price of gasoline and a decrease in the quantity of gasoline sold. c. a decrease in the price of gasoline and an increase in the quantity of gasoline sold. D. a decrease in the quantity of gasoline sold, but the price of gasoline may increase, decrease, or remain the same. E. an increase in the price of gasoline, but the quantity of gasoline sold may increase, decrease, or remain the same.

Type your question here

For each event given below, respond to the following points using the determinants of demand and supply:

A. Determine whether demand or supply changes or if the event instead causes a change in quantity demanded or quantity supplied.

B. State whether the change is an increase or decrease.

C. List the determinant that led you to that conclusion.

Events

1. The price of oil increases because OPEC reduces oil production.

2. The tax on gasoline consumption increases.

3. Firms start producing more fuel efficient vehicles and produce fewer vehicles that use fuel inefficiently.

4. Summer arrives and more people choose to take vacations.

5. The price of gasoline increases.

6. The price of ethanol, a complement good, increases.

7. There is a large oil spill in the Gulf of Mexico.

8. Incomes fall because a recession begins and gasoline is a normal good.

9. Consumers desire more electric powered vehicles instead of gasoline powered vehicles.

10. A new production method allows for twice as much gasoline to be refined per day.

Consider the demand for the gasoline sold by Gas Station G in a large city. The gasoline sold by other stations is an excellent substitute for the gasoline sold by Station G. Because there are many good substitutes for gasoline, its demand is probably elastic.

A. If the price at Gas Station G rises by 10%, by what percentage is its quantity sold likely to change, other things being the same?

B. In this case, what will happen to Station G'S revenues when the price rises?

C. Make a general statement about how revenues will change when the price rises or when it falls if demand is elastic and if it is inelastic.

D. It is often suggested that increasing gasoline taxes will reduce the number of gasoline people will buy and, as a result, reduce air pollution. In the short run would such a policy be effective in reducing air pollution? Would the policy be effective in reducing air pollution in the long run? Why?

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