[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!]
Ask:
According to the Energy Information Administration, crude oil collectively supplies gasoline, heating oil, jet fuel, lubricating oil, asphalt and many other products. Suppose that widespread adoption of electric vehicles (EVs) reduces demand for gasoline but does not affect demand for the other products collectively supplied by oil. How will widespread adoption of electric vehicles affect the prices of these other products?