Type your question here For each event given below, respond to the following poi
ID: 1187454 • Letter: T
Question
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.
Explanation / Answer
1. when the price of oil increases beacuse OPEC reduce oil production there will be a decrease in the quantity supplied. due to which price of oil increases assuming demand to be constant. 2. when the tax on gasoline consumption increases it is an example of pay-as-you-get tax. so when the tax increases its demand will go down,supply assuming to be same. hence demand decreases. 3. when Firms start producing more fuel efficient vehicles and produce fewer vehicles that use fuel inefficiently the demand of the fuel increases,its supply being same as now more people desire vehicles. 4. when Summer arrives and more people choose to take vacations then the supply of labor in the market decreaes, demand being same this causes an upward pressure on the prices. 5. when the price of gasoline increases people are demotivated to use it and its demand decreases. 6. when The price of ethanol, a complement good, increases then the demand for gasoline decreases, since cross elasticity of demand would be negative. 7. when there is a large oil spill n the gulf of mexico then demand being same, the supply of oil decreases. 8. since income falls and gasoline being a normal good its demand decreases 9. when consumers desire more electric powered vehicles instead of gasoline powered vehicles then the demand for gasoline decreases,its supply assuming being constant its price will come down. 10. when a new production method allows for twice as much gasoline to be refined per day then the price of gasoline decreses due to which its demand increases.
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