Gas prices have become remarkably high since the beginning of the year 2022. On June 9th, 2022, a gallon of gasoline costs 4.06 dollars---almost 400% higher than it was on the same date of 2020 ($1.1 per gallon). We will apply what we learned about demand and supply to take a look at gas prices. Suppose that in 2020, the worldwide daily supply function of gasoline is given by Qs(p) = 150 + 100p. The daily demand of gasoline in 2020 is: QD (P) 300 - 50p, where p is the price per gallon of gasoline and q is in the unit of million gallons. a) Solve for the market equilibrium for daily gasoline in 2020. What is the equilibrium price? What is the equilibrium quantity? b) In the summer of 2022, people started to return to offices and to traveling. This leads to an outward shift of the demand. Suppose now that the demand becomes: QD(P) = 700-50p. In the meantime, the supply-chain problems and the Ukrainian war has led to an inward shift of the supply. Suppose the supply becomes: Qs(p) = 100 + 100p. What is the new equilibrium price and what is the new equilibrium quantity?

Gas prices have become remarkably high since the beginning of the year 2022. On June 9th, 2022, a gallon of gasoline costs 4.06 dollars---almost 400% higher than it was on the same date of 2020 ($1.1 per gallon). We will apply what we learned about demand and supply to take a look at gas prices. Suppose that in 2020, the worldwide daily supply function of gasoline is given by Qs(p) = 150 + 100p. The daily demand of gasoline in 2020 is: QD (P) 300 - 50p, where p is the price per gallon of gasoline and q is in the unit of million gallons. a) Solve for the market equilibrium for daily gasoline in 2020. What is the equilibrium price? What is the equilibrium quantity? b) In the summer of 2022, people started to return to offices and to traveling. This leads to an outward shift of the demand. Suppose now that the demand becomes: QD(P) = 700-50p. In the meantime, the supply-chain problems and the Ukrainian war has led to an inward shift of the supply. Suppose the supply becomes: Qs(p) = 100 + 100p. What is the new equilibrium price and what is the new equilibrium quantity?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 1E: For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect...

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