A1. The demand in Japan for gasoline is inelastic and therefore not very sensitive to market...

A1. The demand in Japan for gasoline is inelastic and therefore not very sensitive to market prices. Given that, describe the effect of each of the following on the quantity demanded or the demand for gasoline in Japan. Indicate whether the effect of each is an upward or downward movement along a given demand curve or instead involves an outward or inward shift in the demand curve for gasoline. Explain your answers.

a. A sharp increase in the average price of gasoline in Japan.
b. A sharp rise in the price of automobiles in Japan.
c. A fall in the price of public transportation in Japan.
d. A fall in the price of electic powered cars in Japan.

Expert Solution

a) A sharp increase in the average price of gasoline in Japan: This will not affect the demand much as the demand for the Gasoline is inelastic in nature. But there will be slight movement along the demand curve of Gasoline in Japan and there will be no shift in the demand curve.

b) A sharp increase in the price of the automobiles in Japan will shift the demand curve for the gasoline to the left or inward. As Automobile and Gasoline are complementing an increase in the price of the automobile will decrease the demand for gasoline at the current price and the automobiles both.

c) Public transportation is a substitute for personal vehicles used in Japan if the price of public transport decreased people will use more and more public transport and the demand for petrol will fall at the current pice. This will shift the demand curve inward at a lower quantity and lower price.

d) Electric powered cars are again a substitute for the petrol run car. A fall in the price of electric cars will reduce the demand for the petrol car and subsequently, the demand for petrol. This will shift the demand curve for petrol inward at a lower price and lower quantity.

Rahul Sunny answered 2 years ago

4. Consider the market for gasoline. Gasoline demand is inelastic in the short run and elastic...

4. Consider the market for gasoline. Gasoline demand is inelastic in the short run and elastic in the long run. a. (4) Why is gasoline inelastic in the short run and elastic in the long run? b. (2) Draw the short run and long run markets for gasoline labeling equilibrium price and quantity. P Q Short run P Q Long run Now suppose the supply of gasoline doubles. c. (2) Draw this change on the graphs above. d. (2) Does...

The following questions are very important regarding demand, supply and market under difference price scenario. Therefore,...

The following questions are very important regarding demand, supply and market under difference price scenario. Therefore, I would like you to list your answers and check other answers for better learning outcome. this is from the book The scope and method of economics. answer all the questions that you can! List factors will shift consumer demand. The shift in demand curve is called? List factors will shift producer supply. The shift in supply curve is called? What factor results in...

6- Consider the market for rubber bands. If this market has a very inelastic supply curve...

6- Consider the market for rubber bands. If this market has a very inelastic supply curve and a very elastic demand curve, who would bear most of the burden of a tax on rubber bands? a) Consumers b) Producers c) They would bear the burden more or less equally. d) We can't know who will bear most of the burden. 7- If this market has a very elastic supply curve and a very inelastic demand curve, who would bear most...

MBA - Managerial Economics Demand of a product is usually very sensitive to economic variables, such...

MBA - Managerial Economics Demand of a product is usually very sensitive to economic variables, such as the prices and consumer income. This responsiveness of demand is elasticity. Compute elasticity in the below scenarios: Yesterday, the price of envelopes was $3 a box, and Jacky was willing to buy 10 boxes. Today, the price has gone up to $3.75 a box, and Jacky is now willing to buy 8 boxes. Is Jacky's demand for envelopes elastic or inelastic? What is...

If in a market for a good where the consumers’ elasticity of demand is relatively inelastic...

If in a market for a good where the consumers’ elasticity of demand is relatively inelastic there is an increase in shoplifting at the stores that sell this product, which is likely to be affected more, the product’s price (the price effect) or the quantity of the product purchased (the output effect)? Which of these products is likely to have a more inelastic demand, salt or Cheerios?

Consider a market with a perfectly elastic demand curve at p∗= 1,763 and a perfectly inelastic...

Consider a market with a perfectly elastic demand curve at p∗= 1,763 and a perfectly inelastic supply curve at q∗= 452. What is the Consumer Surplus? What is the Producer Surplus?

Define elastic and inelastic demand

In the local market for gasoline ,supply is given by QS=30P and demand is given by...

In the local market for gasoline ,supply is given by QS=30P and demand is given by QD=400−10P. (a) Calculate the equilibrium price and quantity in the competitive market. Then, calculate equilib- rium price and quantity if a $1 per unit tax is imposed. Solution: Absentthetax,QS =30P=QD =400−10P⇒40P=400⇒P=10,Q=300.Withthe tax,QS =30PS =QD =400−10PB =400−10(PS+1)⇒40PS =390⇒PS =9.75,PB =10.75. Quantity is then 30(9.75) = 292.5. (b) Calculate the deadweight loss associated with the imposition of the $1 tax. Is the deadweight loss from the...

Question 2 The demand for driverless cars is highly inelastic. Draw the market for driverless cars...

Question 2 The demand for driverless cars is highly inelastic. Draw the market for driverless cars in equilibrium. Be sure to label the axes and the curves/lines. Clearly demonstrate the initial equilibrium price and quantity. On this same graph, demonstrate what will happen to either demand or supply when the government offers tax incentives (subsidies) to firms developing driverless cars. Explain why you have drawn the changes you have. On this same graph, demonstrate what will happen if consumer incomes...

Draw a supply and demand graph for gasoline. Consider whether supply or demand for gasoline is...

Draw a supply and demand graph for gasoline. Consider whether supply or demand for gasoline is more inelastic, and draw the curves accordingly. Label the original equilibrium price $3. In California, the federal, state and local excise and sales taxes total about 77 cents per gallon. Assuming the government taxes the seller directly, draw the impact of this tax on the supply and demand diagram. Label the new price the consumer pays (Pc), the price the seller receives after taxes...

Question