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The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. What effect will this event have supply and demand in the gasoline market? Demonstrate your answer graphically Instructions: Use the tool provided 'New line' to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line.

The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. What effect will this event have supply and demand in the gasoline market? Demonstrate your answer graphically Instructions: Use the tool provided 'New line' to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. What effect will this event have supply and demand in the gasoline market? Demonstrate your answer graphically Instructions: Use the tool provided 'New line' to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line.
**Consumer Expectations and Market Equilibrium** In this exercise, we examine the impact of changes in consumer expectations on market equilibrium. **Problem Statement:** The statement reads: "This change in consumer expectations will cause the equilibrium price to (Click to select) and the equilibrium quantity to (Click to select)." **Explanation:** The text is part of a multiple-choice question inviting the user to select how changes in consumer expectations might affect the equilibrium price and quantity in a market. The placeholders "(Click to select)" likely offer options such as "increase," "decrease," or "remain the same." **Learning Objective:** Understanding how consumer expectations influence market dynamics is crucial for predicting shifts in supply and demand curves. This exercise helps students apply theoretical knowledge to real-world economic scenarios.
Transcribed Image Text:**Consumer Expectations and Market Equilibrium** In this exercise, we examine the impact of changes in consumer expectations on market equilibrium. **Problem Statement:** The statement reads: "This change in consumer expectations will cause the equilibrium price to (Click to select) and the equilibrium quantity to (Click to select)." **Explanation:** The text is part of a multiple-choice question inviting the user to select how changes in consumer expectations might affect the equilibrium price and quantity in a market. The placeholders "(Click to select)" likely offer options such as "increase," "decrease," or "remain the same." **Learning Objective:** Understanding how consumer expectations influence market dynamics is crucial for predicting shifts in supply and demand curves. This exercise helps students apply theoretical knowledge to real-world economic scenarios.
The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. a. What effect will this event have on supply and demand in the gasoline market? Demonstrate your answer graphically. **Instructions:** Use the tool provided 'New line' to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line. **Market for Gasoline** *Graph Explanation:* - The graph displays a standard supply and demand model with price ($) on the vertical axis and quantity of gasoline (in thousands of gallons) on the horizontal axis. - The demand curve (D) is depicted in red, sloping downwards from left to right, indicating that as prices decrease, the quantity demanded increases. - The supply curve (S) is shown in green, sloping upwards from left to right, indicating that as prices increase, the quantity supplied increases. - The intersection of these curves represents the equilibrium price and quantity in the market. *Tools:* - New line: Use this tool to draw a new curve, reflecting changes in expectations about the future price of gasoline.
Transcribed Image Text:The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. a. What effect will this event have on supply and demand in the gasoline market? Demonstrate your answer graphically. **Instructions:** Use the tool provided 'New line' to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line. **Market for Gasoline** *Graph Explanation:* - The graph displays a standard supply and demand model with price ($) on the vertical axis and quantity of gasoline (in thousands of gallons) on the horizontal axis. - The demand curve (D) is depicted in red, sloping downwards from left to right, indicating that as prices decrease, the quantity demanded increases. - The supply curve (S) is shown in green, sloping upwards from left to right, indicating that as prices increase, the quantity supplied increases. - The intersection of these curves represents the equilibrium price and quantity in the market. *Tools:* - New line: Use this tool to draw a new curve, reflecting changes in expectations about the future price of gasoline.
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