Suppose that the world price of a gallon of gasoline is $2.00 dollars per barrel and the US can buy all the gas it wants at this price. Suppose also that the demand and supply schedules for gasoline in the US are as follows: Price ($ per gallon) US Quantity demanded US quantity supplied $1.00 65 35 $1.50 60 40 $2.00 55 45 $2.50 50 50 $3.00 45 55 Draw the supply and demand curves for the US. With free trade in gasoline, what price will Americans pay for a gallon of gas? What quantity will Americans buy? How much of this will be supplied by American producers? How much will be imported? Illustrate total imports on your graph of the US gasoline market. Suppose the US imposes a $.50 tax per gallon on imported gas. What quantity would Americans buy? How much of this would be supplied by American producers? How much would be imported? Who is helped and who is hurt among the following groups: domestic consumers, domestic gasoline producers, the US government, foreign producers.
Suppose that the world price of a gallon of gasoline is $2.00 dollars per barrel and the US can buy all the gas it wants at this price. Suppose also that the demand and supply schedules for gasoline in the US are as follows: Price ($ per gallon) US Quantity demanded US quantity supplied $1.00 65 35 $1.50 60 40 $2.00 55 45 $2.50 50 50 $3.00 45 55 Draw the supply and demand curves for the US. With free trade in gasoline, what price will Americans pay for a gallon of gas? What quantity will Americans buy? How much of this will be supplied by American producers? How much will be imported? Illustrate total imports on your graph of the US gasoline market. Suppose the US imposes a $.50 tax per gallon on imported gas. What quantity would Americans buy? How much of this would be supplied by American producers? How much would be imported? Who is helped and who is hurt among the following groups: domestic consumers, domestic gasoline producers, the US government, foreign producers.
Chapter4: Markets In Action
Section: Chapter Questions
Problem 6SQ
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- Suppose that the world price of a gallon of gasoline is $2.00 dollars per barrel and the US can buy all the gas it wants at this price. Suppose also that the
demand and supply schedules for gasoline in the US are as follows:
Price ($ per gallon) US Quantity demanded US quantity supplied
$1.00 65 35
$1.50 60 40
$2.00 55 45
$2.50 50 50
$3.00 45 55
- Draw the
supply and demand curves for the US. - With free trade in gasoline, what price will Americans pay for a gallon of gas? What quantity will Americans buy? How much of this will be supplied by American producers? How much will be imported? Illustrate total imports on your graph of the US gasoline market.
- Suppose the US imposes a $.50 tax per gallon on imported gas. What quantity would Americans buy? How much of this would be supplied by American producers? How much would be imported?
- Who is helped and who is hurt among the following groups: domestic consumers, domestic gasoline producers, the US government, foreign producers.
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