Use the figure below to answer the following question(s).
Figure 4-9

-Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point

Question

Use the figure below to answer the following question(s).
Figure 4-9
 
-Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point

Quizplus · Accepted Answer

Point A represents the equilibrium point of the market for gasoline, where the quantity demanded and supplied are equal at a price of $1.20 per gallon. If the demand for gasoline were to increase, there would be excess demand (shortage) at the current price, causing the price to rise. This would cause the net price received by producers to increase and incentivize them to increase supply. Thus, the supply curve would shift to the right from S1 to S2, causing the equilibrium point to move to point B, where the price of gasoline would increase from $1.20 per gallon to $1.40 per gallon, and the net price received by producers would decline from $1.20 per gallon to $1.00 per gallon. Therefore, all of the above would occur, making option D the correct choice.

Use the Figure Below to Answer the Following Question(s)