Draw a demand and supply graph of the market for gasoline

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An article in the Wall Street Journal discussed the market for gasoline in the United States during the summer of 2013. Compared with the previous summer, the article stated that there will be "lower demand, as cars become more efficient" and "growth in oil production from hydraulic fracturing of shale deposits in the U.S."

a. Draw a demand and supply graph of the market for gasoline to analyze the situation described in this article. Be sure to indicate the equilibrium price and quantity of gasoline in the summer of 2012, the equilibrium price and quantity of gasoline in the summer of 2013, and any shifts in the demand curve and supply curve for gasoline.

b. Can you be certain from your analysis whether the equilibrium price of gasoline would increase or decrease? Can you be certain whether the equilibrium quantity of gasoline would increase or decrease? Briefly explain. Source: Ángel González, "Drivers Can Expect a Break On Summer Gas Prices," Wall Street Journal, April 14, 2013.

Reference no: EM131150247

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