[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!]
Query:
In response to the Power Info Administration, crude oil collectively provides gasoline, heating oil, jet gas, lubricating oils, asphalt, and plenty of different merchandise. Suppose the widespread adoption of electrical automobiles (EVs) reduces gasoline demand however doesn’t have an effect on the demand for the opposite merchandise collectively equipped by oil. How will the widespread adoption of EVs have an effect on the costs of those different merchandise?
