Answer to Question #80252 in Microeconomics for Diamond

Question

What factors lead to high pump gas prices these days from Supply perspectives? Apply ALL of PRESTN Supply Determinants and include the source pages in your textbook.

Answer 1

High pump gas prices may be a result of decrease in supply on pump gas.
A decrease in supply can result from a change in any of the five supply determinants.
1) Resource Prices: An increase in resource prices.
2) Production Technology: A decrease in production technology.
3) Other Prices: An increase in the price of a substitute-in-production or a decrease in the price of a complement-in-production.
4) Sellers' Expectations: Expectations by sellers of an increase in the price in the future.
5) Number of Sellers: A decrease in the number of sellers in the market.
Source:
https://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=supply+decrease