Everyones Gasoline Problem
EXERCISE 1
QUESTION 1. Everyone’s Gasoline Problem
It is a fact that gasoline prices can become high enough that consumers will make
substantial reductions in their gasoline purchases. Depending how much prices increase
relates on how easily consumers can adopt to substitutes for gasoline . This would
include taking public transportation. Studies have reported that consumers do not easily find substitutes for gasoline, and that prices must increase significantly to cause
even a relatively small decrease in the quantity of gasoline consumers want.
Gasoline is an inelastic demand , better explained by a “situation in which a price change leads
to a less than proportionate change in quantity demanded.” ( Inforuge )
Generally, the price of a commodity, such as gasoline, reflects producers’ costs and
consumers’ willingness to pay. Gasoline prices rise if it costs more to produce and
supply gasoline, or if people want to buy more gasoline at the current price when
demand is greater than supply. Gasoline prices fall if it costs less to produce and supply
gasoline, or if people wish to buy less gasoline at the current price – that is, when supply is greater than demand. Gasoline prices will stop rising or falling when they reach the
price at which the quantity consumers demand matches the quantity that producers will supply.
how consumers respond to price changes will affect how high prices rise and how low they fall. Limited substitutes for gasoline restrict the options available to consumers to
respond to price increases. That gasoline consumers typically do not reduce their
purchases substantially in response to price increases makes them vulnerable to
substantial price increases
how producers respond to price changes will affect how high prices rise and how low
they fall. In general, when there is not enough of a product to meet consumers’ demands
at
QUESTION 1. Everyone’s Gasoline Problem
It is a fact that gasoline prices can become high enough that consumers will make
substantial reductions in their gasoline purchases. Depending how much prices increase
relates on how easily consumers can adopt to substitutes for gasoline . This would
include taking public transportation. Studies have reported that consumers do not easily find substitutes for gasoline, and that prices must increase significantly to cause
even a relatively small decrease in the quantity of gasoline consumers want.
Gasoline is an inelastic demand , better explained by a “situation in which a price change leads
to a less than proportionate change in quantity demanded.” ( Inforuge )
Generally, the price of a commodity, such as gasoline, reflects producers’ costs and
consumers’ willingness to pay. Gasoline prices rise if it costs more to produce and
supply gasoline, or if people want to buy more gasoline at the current price when
demand is greater than supply. Gasoline prices fall if it costs less to produce and supply
gasoline, or if people wish to buy less gasoline at the current price – that is, when supply is greater than demand. Gasoline prices will stop rising or falling when they reach the
price at which the quantity consumers demand matches the quantity that producers will supply.
how consumers respond to price changes will affect how high prices rise and how low they fall. Limited substitutes for gasoline restrict the options available to consumers to
respond to price increases. That gasoline consumers typically do not reduce their
purchases substantially in response to price increases makes them vulnerable to
substantial price increases
how producers respond to price changes will affect how high prices rise and how low
they fall. In general, when there is not enough of a product to meet consumers’ demands
at
Cited: 1. Gasoline and the Economy. Retrieved July 19, 2012, from http://www.inforefuge.com/gasoline-economy