Solved by Expert Tutors
Econ 203 Mid-term Workforce Assessment: Shocks in the Market for Gas A key skill in economics is the ability to use the theory of supply and demand...
Solved by Expert Tutors
Question

Econ 203 Mid-term Workforce Assessment:  Shocks in the Market for Gas 

A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this assessment, you will demonstrate your ability to analyze the effects of several “shocks” on the market for gas at service stations. 

Carbon tax: Suppose the government imposes a carbon tax on oil production.

  1. Will this affect the supply or the demand for gasoline? Why? Which determinant of demand or supply is being affected?
  2. Show graphically with before and after curves on the same axes.
  3. How will this change the equilibrium price and quantity of gasoline? Explain your reasoning. (Be sure to identify which of the following apply: the cost of production, a change in technology, tastes and preferences, income, the price of substitutes or the price of complements affects equilibrium price and equilibrium quantity)
  4. Electric cars: Now consider the invention of cheap electric vehicles.
  5. Explain how you imagine the invention of cheap electric cars would affect the market (demand or supply) for gasoline? Why? Which determinant of demand or supply would be affected?
  6. Show graphically with before and after curves on the same axes.
  7. How will this change the equilibrium price and quantity of gasoline? Explain your reasoning. (Be sure to identify which of the following apply: the cost of production, a change in technology, tastes and preferences, income, the price of substitutes or the price of complements affects equilibrium price and equilibrium quantity)
  8. Combine Cases 1 and 2: Suppose that a carbon tax is imposed and electric cars become common.
  9. What will the combined impact be on the equilibrium price and quantity of gasoline? Explain your reasoning and show graphically. 

Sign up to view the entire interaction

Step-by-step answer

sum do

ce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac,

carbon tax.docx
inia pulvinar tortor nec facilisis. Pellentesqu molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, d e vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor

Subscribe to view the full answer

Subject: Business, Economics

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question