Topic: The Gasoline Market
It would seem that there is a global consensus that investment is needed in the search for efficient alternative energy sources to replace the use of fossil fuels.
Why has this become a global priority?
What factors determine the supply of gasoline? Explain whether the relationship between each of these determinants is direct (positive) or inverse (negative).
What factors determine the demand for gasoline? Explain whether the relationship between each of these determinants is direct (positive) or inverse (negative).
According to your short-term forecasts, if electric cars were cheaper than conventional cars (those that use gasoline),
What would happen to the demand for conventional cars?
What would happen to the demand for gasoline?
As a consequence, what would happen to the price of gasoline? Is the change in the price of gasoline due to a shortage (high cost) or a surplus of gasoline in the market? What would happen to the quantity of gasoline demanded?
What would happen to the quantity of gasoline supplied?
Note: Please note that this assignment is not open-ended.
Answer all the questions posed in the topic statement.
To answer each question, select the scenario (graph) from the supply and demand model (A, B, C, or D) that best illustrates your arguments about the impact of the decrease in the cost of electric cars on the gasoline market.
Supply and Demand Graphs with Detailed Explanation.doc
Attention: This week’s topic aims to provide you with the opportunity to reflect on how markets function. To do this, you should explore and familiarize yourself with the supply and demand model. The supply and demand model is a tool economists use to illustrate the behavior of the market for a good and to show the impact on prices and quantities of four possible scenarios: increased and decreased supply, and increased and decreased demand.
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