[Editor’s note: Welcome to the second of our new series on Price Theory problems with Professor Bryan Cutsinger. You can view the posts from last month’s problem here and here. Share your proposed solutions in the Comments. Professor Cutsinger will be present in the comments for the next two weeks, and we’ll again post his proposed solution shortly thereafter, May the graphs be ever in your favor, and long live price theory!]
Question:
According to the Energy Information Administration, crude oil collectively provides gasoline, heating oil, jet fuel, lubricating oil, asphalt and many other products. Suppose that the widespread adoption of electric vehicles (EVs) reduces the demand for gasoline but does not affect the demand for other products that share fuel. How will the widespread adoption of EVs affect the prices of these other products?
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