Question

Use the graph to answer the question.

Graph depicting supply and demand of gasoline

Look at the graph above. Which situation could result in a new equilibrium price of $1.80?

(1 point)
Responses

New oil supplies found in the Gulf of Mexico
New oil supplies found in the Gulf of Mexico

An increase in the price of automobiles (a complementary good)
An increase in the price of automobiles (a complementary good)

A war causing a disruption in the supply chain of oil
A war causing a disruption in the supply chain of oil

A new technology that makes electric cars more affordable

Answer 1

To analyze which situation could result in a new equilibrium price of $1.80 for gasoline, we need to consider how each option would affect the supply and demand of gasoline.

1. **New oil supplies found in the Gulf of Mexico**: This situation would likely increase the supply of gasoline, which could reduce the price and lead to a new equilibrium price lower than $1.80.

2. **An increase in the price of automobiles (a complementary good)**: If the price of automobiles increases, demand for gasoline might decrease (since fewer people might buy cars, or they might drive less). This would typically lead to a decrease in the price of gasoline.

3. **A war causing a disruption in the supply chain of oil**: This scenario would likely reduce the supply of gasoline, leading to higher prices and potentially an equilibrium price above $1.80.

4. **A new technology that makes electric cars more affordable**: If electric cars become more affordable, demand for gasoline might decrease as consumers might opt for electric vehicles instead. This could lead to a decrease in the price of gasoline.

Given these analyses, the **situation that could potentially lead to a new equilibrium price of $1.80 is the first one: New oil supplies found in the Gulf of Mexico**. It indicates an increase in supply, which aligns with adjusting to lower prices, potentially creating a new equilibrium price around $1.80.