Discussion:
For each event given below, respond to the following points using the determinants of demand and supply:
1. Determine whether demand or supply changes or if the event instead causes a change in quantity demanded or quantity supplied.
2. State whether the change is an increase or decrease.
3. 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.