Although 23 states barred the sale of self-service gasoline in 1968, most removed the bans by the mid 1970s. By 1992, self-service outlets sold nearly 80% of all US gas, and only New Jersey and Oregon continued to ban self-service sales. Using predicted values for self-service sales for New Jersey and Oregon, Johnson and Romeo (2000) estimated that the ban in those two states raised the price of gasoline by somewhere between 3¢ and 5¢ per gallon. Why did the ban affect the price? Illustrate using a figure and explain. Show the welfare effects in your figure.
Although 23 states barred the sale of self-service gasoline in 1968, most removed the bans by the mid 1970s. By 1992, self-service outlets sold nearly 80% of all US gas, and only New Jersey and Oregon continued to ban self-service sales. Using predicted values for self-service sales for New Jersey and Oregon, Johnson and Romeo (2000) estimated that the ban in those two states raised the price of gasoline by somewhere between 3¢ and 5¢ per gallon. Why did the ban affect the price? Illustrate using a figure and explain. Show the welfare effects in your figure.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Although 23 states barred the sale of self-service gasoline in 1968, most removed the bans by the
mid 1970s. By 1992, self-service outlets sold nearly 80% of all US gas, and only New Jersey and
Oregon continued to ban self-service sales. Using predicted values for self-service sales for New
Jersey and Oregon, Johnson and Romeo (2000) estimated that the ban in those two states raised
the price of gasoline by somewhere between 3¢ and 5¢ per gallon. Why did the ban affect the
price? Illustrate using a figure and explain. Show the welfare effects in your figure.
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