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i have seen a couple different answers for this. looking dor some clarification 4. a) Suppose that, in the gasoline market, the demand for gasoline
i have seen a couple different answers for this. looking dor some clarification
4. a) Suppose that, in the gasoline market, the demand for gasoline is inelastic and the price of crude oil, the primary input of gasoline, increases. Iflustrate and explain the effects of this increase in the price of crude oil on the total revenue of gasoline producers. Specifically, will the total revenues of gasoline producers increase, decrease, or remain constant? Illustrate grophically and compore the change in revenue coused by the change in the market equilibrium price (a.k. a. the price effect) and the change in revenue coused by the change in the market equilibrium quantity (a.k.a. the output effect). b) Suppose that in the energy drink market, the demand for energy drinks is elastic and the price of aluminum cans, an input used by energy drink producers (such as Red Bull and Monster) for producing (and selling) energy drinks, increases. IIfustrote and explain the effects of this increase in the price of aluminum cans on the total revenue of energy drink producers. Specifically, will the total revenues of energy drink producers increase, decrease, or remain constant? Illustrate graphically and compare the change in revenue caused by the change in the market equilibrium price (a.k.a. the price effect) and the change in revenue caused by the change in the market equilibrium quantity (a.k.a, the output effect). c) Compare and explain the results of the input price increases on the total revenue of gasoline and energy drink producers Step by Step Solution
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