Katarina drives past the same gas station every day. she realizes that the gas station always changes its prices on tuesdays but keeps the price steady the rest of the week. on saturday, katarina turns on the news and hears a report projecting that the price of gasoline is going to increase. holding all else constant, what do you think would happen to katarina's demand for gasoline on monday?

Question

Business

Bradley Jarvis

28 January, 19:54

Katarina drives past the same gas station every day. she realizes that the gas station always changes its prices on tuesdays but keeps the price steady the rest of the week. on saturday, katarina turns on the news and hears a report projecting that the price of gasoline is going to increase. holding all else constant, what do you think would happen to katarina's demand for gasoline on monday?

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Answers (2)

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Camille Francis · Answer 1

Since we know that gas prices change on Tuesday and remain constant for the rest of the week, we could conclude that Katarina's expectations of the future price increase, in the wake of the news report about the gas prices rising, would cause a shift in the demand curve to the right.

Reed Bailey · Answer 2

Katarina demand for Gas on Monday will increase.

Explanation:

One of the major factors that affect demand is Price. Increase in price causes fall in demand while a decrease in price causes a rise in demand.

But in this situation, Katrina will be responding and taking an advantage of the information that the price of Gas will be going up by having a higher demand for gas on Monday.

Moreover, he has studied the pattern of operation of the gas station to know that price adjustment is carried out only on tuesdays, therefore the best time for him to get fuel at the incumbent rate is on Monday, just before likely adjustment for the new price takes effect.