Years ago in the United States you could buy gasoline for 0

Years ago, in the United States, you could buy gasoline for $ 0.85 per gallon. Now you could buy gasoline for $3.02 per gallon. Use the concepts of demand, supply, and elasticity to explain the changes in the price of gasoline.

Solution

Law of demand states that if the price of gasoline increases then the quantity of demanded decreases, ceteris paribus.

On the other hand, Law supply states that if the price of gasoline increases then the quantity of supplied increases, ceteris paribus.

Elasticity is the degree of responsiveness of the change in demand with respect to price or change in supply with respect to price.