3.108 An economist is analyzing the amount of gasoline (in millions of liters) a producer is willing

Question:

3.108 An economist is analyzing the amount of gasoline (in millions of liters) a producer is willing to supply at each price level (in € per gallon). Long-term analysis indicates that 90% of the gasoline producers are willing to increase supply when there is an increase of

€0.20 per liter in the price. In the same period, 15% of the gasoline producers increase their supply when the price does not increase by €0.20 per liter. Assume that the probability of the price of gasoline increasing by

€0.20 per liter is 2%.

If the gasoline producers are willing to increase their supply, find the probability that the price of gasoline increases by €0.20 per liter. Comment on the probability value.

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