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Answer :
Final answer:
Hurricane Ian disrupted gasoline supply in Florida, causing prices to rise to [tex]$3.32 per gallon and equilibrium quantity to drop due to a leftward shift in the supply curve. The new equilibrium reflects reduced availability of gasoline post-disaster. This demonstrates the impact of external events on market dynamics.
Explanation:
Impact of Hurricane Ian on Gasoline Prices
When Hurricane Ian struck Florida in September 2022, it caused significant disruptions in the supply of gasoline due to damaged refineries and gas stations. This incident illustrates a leftward shift in the market supply curve, indicating that at every price level, a lower quantity of gasoline is available for sale.
Graphical Representation
1. To illustrate this with a supply and demand graph, draw the initial supply curve (S1) and the demand curve (D). The initial equilibrium price is set where these two curves intersect. After Hurricane Ian, shift the supply curve to the left (S2), representing a decrease in supply.
2. The new intersection between the demand curve and the new supply curve will determine the new equilibrium price and quantity. In this case, the equilibrium price of gasoline rises to $[/tex]3.32 per gallon due to the reduced supply, while the equilibrium quantity decreases.
Effects of the Shift
The effects of this leftward shift of the supply curve can be summarized as follows:
- Equilibrium Price: Increases from the initial level to $3.32 per gallon.
- Equilibrium Quantity: Decreases as suppliers cannot meet the original demand at previous price levels.
This situation exemplifies how unexpected events can significantly alter market conditions, affecting both prices and the quantities available for consumers.
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