To think about the wider impact ofHurricane Katrina on supply and demand, let\'s

Question

To think about the wider impact ofHurricane Katrina on supply and demand, let's consider the marketfor gasoline in Colorado, a state far enough from Louisiana that itis not immediately affected by disruptions in oil infrastructure.The following graph shows the supply and demand for gasoline inColorado. The curves D1 and S1 show the demand and supply ofgasoline in Colorado on an average day in late summer. The supplycurve is vertical because on any given day, the amount of gasolinealready delivered to gas stations is fixed.

Explanation / Answer

As long as the fear is not real (supply doesn't real go down)its A.   A demand shift from D1 to D2

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