Consider the market for gasoline and the market for Bugatti Veyron, a two-seater car that is considered the most gas-guzzling car sold in the United States. Assume both markets are in equilibrium. Now assume Iran attacks two major Saudi Arabian oil facilities knocking out 5 percent of the world’s oil supply just like that (and like they did a few years ago). Explain in words what will happen in both markets.

Q&A Education