Workshop6.P&R.KEY - Workshop 6 P&R 1 Recent...

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Unformatted text preview: Workshop 6 P&R 1 Recent data show an increase in retail gasoline prices of 40% and reduction in consumption of 2%. Does this imply a change in demand or change in quantity demanded? Explain. A change in variables other than the price of a good, such as income or the price of another good, leads to a change in demand. This shifts the entire demand curve. Change in quantity demanded changes in the price of a good leads to a change in the quantity demanded of that good. This corresponds to a movement along a given demand curve. So in this case of the gasoline it would be a change in quantity demanded because the price changed and then so did the quantity. This would cause a movement along the curve from a higher point to a lower point. P&R 2 If both demand and supply increase, what happens to the gasoline price and quantity of said good?...
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