How would the market for gasoline react if the costs of extracting and refining it rise, considering it has an inelastic demand curve?

The market for gasoline, when faced with rising costs of extraction and refining, will see most of those costs being passed on to consumers through higher prices due to the nature of inelastic demand. Inelastic demand means that consumers are relatively unresponsive to changes in price; they will continue to purchase similar quantities of gasoline despite price increases. This lack of elasticity implies that the burden of increased costs primarily falls on consumers, which translates higher production costs into higher prices at the pump.

With inelastic demand, even if consumers feel the pinch from rising prices, their essential need for gasoline means they will not significantly reduce their quantity demanded. Consequently, the overall effect is that most of the increase in production costs will lead to an increase in the price of gasoline rather than a significant drop in the quantity sold. This behavior reflects the fundamental principles of supply and demand in relation to market elasticity.