(Editor’s note: Welcome to the second in a new series on price theory issues. Professor Brian Cutsinger. You can see last month’s issue posts here and here. Please share your proposed solutions in the comments. Professor Cutsinger will be participating in the comments for the next two weeks and will repost his proposed solution shortly thereafter. May the graphs be in your favor and long live the price theory!)
question:
Crude oil is commonly used to make gasoline, heating oil, jet fuel, lubricants, asphalt and many other products, according to the Energy Information Administration. Assume that the proliferation of electric vehicles (EVs) reduces the demand for gasoline but does not affect the demand for other products that are co-supplied with oil. How will the proliferation of EVs affect the prices of these other products?
