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    Demand or Supply Gasoline vs Various Scenarios

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    The demand for energy in the United States is often described as persistently non-cyclical and not sensitive to both prices effects. Given these characteristics, describe the effect of each of the following on the demand or supply for gasoline. Further indicate the likely direction in the amount of gasoline exchanged the resultant market price when:
    a. domestic incomes increase
    b. the price of natural gas declines
    c. A new refinery comes into service.
    d. The average price of automobiles declines.

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    Solution Preview

    a. domestic incomes increase
    With the increase of domestic income, the demand for gasoline would increase. The price of gasoline would probably increase brought about by the increase in both demand ...

    Solution Summary

    The solution suggests the effect of the identified scenarios on the on the demand or supply of gasoline. These scenarios are a.) domestic incomes increase, b.) the price of natural gas declines, c.) a new refinery comes into service, and d. the average price of automobiles declines.