Supply & Demand Equilibrium

Supply & Demand Equilibrium

Consider the market for gasoline with an equilibrium price and quantity.

A.Suppose a new low-cost source of crude oil is discovered, such as the Bakken Formation in North Dakota. What effect would this discovery have on the price of gasoline and on the quantity of motor vehicle miles driven, other things equal? Why?

B.Given your answer to A, what effect do you think this would have on the number of annual motor vehicle fatalitiesin the succeeding two years? Why?