What new price expect to see in the coming months


Sstudies have fixed the short-run price elasticity for gasoline at the pump at -.20. Suppose that international hostilities lead to a sudden cutoff of crude oil supplies. As a result U.S. supplies of refined gasoline drop and, in equilibrium, the quantity demanded decreases by 40 percent. If gasoline was selling for $3.00 per gallon before the cutoff, what new price would you expect to see in the coming months?

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: What new price expect to see in the coming months
Reference No:- TGS042899

Expected delivery within 24 Hours