PS 2
The
following question was on Quiz 3, but nearly everyone got it wrong.
For each answer option, describe why it is correct or incorrect. Use
graphs and correct terminology. Be thorough.
The price of gasoline recently increased to be higher than we have seen in years. Which of the following claims uses the best economic reasoning to describe the effect?
[Incorrect] Demand for gasoline will fall
[Incorrect] Demand for gasoline will rise because it is harder to get
[Incorrect] We cannot say what will happen to demand for gasoline because everyone is different. Some people drive a lot, and some people only drive a little.
[Incorrect] People need to get to work, school, etc., so they have to get gas when their tank is almost empty. This means they will keep buying the same amount of gas over the following weeks as they did before.
[Correct] People will buy less gas