Question
Please check my response and calculations The price of gasoline impacts the quantity of gasoline demanded on Whidbey Island, WA. Today, the price of gasoline
Please check my response and calculations
The price of gasoline impacts the quantity of gasoline demanded on Whidbey Island, WA. Today, the price of gasoline in Oak Harbor, WA is $3.69 on average, the price of gasoline in Coupeville, WA is 4.39, and the price in Anacortes, WA is $3.39. There are influences in the market e.g. taxes, location, Station affiliation - Exxon, Chevron etc. The time of travel between these cities is about 30 minutes from Coupeville to Oak Harbor travelling North and 30 minutes from Oak Harbor to Anacortes travelling North. I live in Coupeville and work in Oak Harbor. While I generally fill up in Oak Harbor at the Safeway station to take advantage of the reward points. However, if I need gas desperately I will grab 5.00 in Coupeville and fill in Oak Harbor. If I have business North of Oak Harbor I will fill up in Anacortes.
The elasticity/inelasticity of demand in gas depends on other factors than simply price but under the doctrine of ceteris paribus, the price of gas in Oak Harbor can change about .30 per month lately and the quantity I would buy a lot less let's say I am the typical Coupeville, WA gas buyer, e.g., a % change in quantity of gas demanded is
60 gal/month - 50 gal/month = 10/50 =1/5 = .20 x 100 = 20%
$3.39 - 3.69 = - .30/3.69 = -8.1 x 100 8.1 % = -7.1
This is an elastic situation of demand influenced by budget, location, convenience, time and necessity
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started