Jonathan asked in Social ScienceEconomics · 2 years ago

Economics Question?

Your friend tells you that demand for gasoline in the United States increases in the summer because people travel more, and this causes the price of gas to increase in the summer. The friend argues that this is evidence that the "law of demand" doesn't apply for gasoline. Is your friend right or wrong?

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  • 2 years ago
    Favourite answer

    One can't separate the "law of demand" from the "law of supply".

    In this case, there's the assumption that the supply is the same for winter and summer. Since the supply is the same, the law of demand says that prices should increase since more people want a share of the supply. So the friend is wrong.

    However, if the demand increases, then the odds are that the supply also increases, and hence prices MAY drop or stay the same.

    Note that the WHY of the increase in demand (people travel more) is not part of the equation.

  • Anonymous
    2 years ago

    if this event for first time happen , he may be right , but this event used to happen for many year , so the oil market maintain it self the supply system for every event .

  • Anonymous
    2 years ago

    wrong. more travel, more demand in summer. But in facts, it depends on OPEC,as Trump said.

  • 2 years ago

    Wrong.

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