Answer to Question #62603 in Microeconomics for jahrel

Question

Suppose there is news that indicates that gasoline supplies might suddenly become disrupted by a truckers’ union strike. What would you expect would happen to the demand for gasoline in the present? How might consumers change their behavior and why? What impact would this news have on the price of gasoline immediately? Would it matter whether the news story was accurate?

Answer 1

Immediately after the news spread gasoline demand will increase, because customers' expectations are one of the changing demand factors. As a result of excessive demand and constant supply (in the short run) equilibrium price will increase. It does not matter whether the news was true or not