Answered: iv. Discuss one factor EACH that you…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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Question

In 2018, a cold front in Barbados increased both the demand for water heaters and
gasolines. The usage of gasoline was 581 tonnes, an increase from 499 tonnes in the
previous year. The Petroleum Company of Barbados advised Government officials that
demand could outweigh supply and asked companies to increase the supply. They also
asked major gasoline users, such as power plants, to reduce demand.

iv. Discuss one factor EACH that you think influence demand and supply for water
heaters. Provide examples
v. Is demand for gas is price elastic or price inelastic? Explain your reasoning

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