disruptions in oil infrastructure. The following graph shows the supply and dema

Question

disruptions in oil infrastructure. The following graph shows the supply and demand for gasoline in Colorado. The curves D1 and S1show the demand and supply of gasoline in Colorado on an averageday in late summer. The supply curve is vertical because on any given day, the amount of gasoline already delivered to gas stations is fixed. A run on gasoline occurs when consumers' fears of gas shortages in the future lead them to demand more gasoline now. Using supply and demand analysis, which of the following is consistent with this situation? A. A supply shift from S1 to S2 B. A demand shift from D1 to D2 C. A simultaneous demand shift from D1 toD2 and supply shift from S1 to S2

Explanation / Answer

A.       A supply shift from S1 to S2 B.     A demand shiftfrom D1 to D2 the question only stated the change in expectationwith demand, not mentioning anything about supply; so at thatinstant, only demand curve changes. (Supply will changelater as a result of the shift in demand) C.     A simultaneous demand shift from D1 toD2 and supply shift from S1 to S2

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