This preview shows page 1. Sign up to view the full content.
Unformatted text preview: b. All of the refiners produce gasoline for the world gasoline market, which has a single price. In the long-run equilibrium, will this price depend on the costs faced by California producers or the costs faced by other producers? Explain. (Hint: California cannot itself supply the entire world market.) Draw new graphs that illustrate the profits earned by a California refiner and another refiner. c. In this model, is there a subsidy to California refiners? Is it passed on to consumers?...
View Full Document
This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.
- Spring '10