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Elasticity Of Gasoline

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An increase in gas taxes won’t do anything to change people’s habits. Do people stop driving to work, quit their jobs or sell their house for them to move closer to work? I guess not! Increase gas prices do nothing but only give the government more of taxes out from our hard earned money. There are dozen ways to cut back on fuel consumption in response to its high cost to name just a few: carpooling, going to the mall or wet market among others. What we are really debating is the price elasticity demand for gasoline? Is it zero? Or what happen if gasoline rises 10% does consumers buy less or more. We will not be playing guessing games but instead we will study and determine what price elasticity of demand for gasoline based on some valid variables. …show more content…

One study is explaining the distinction in elasticity estimate of gasoline demand in the United States: One of Meta analysis conducted by Mooly Espey which is published in the Energy Journal, which he examined 101 different studies and found that in the short-run (which is defined one year or less), the average price elasticity of gasoline demand is -0.26. That is a 10% rise in the price of gasoline lowers quantity demanded by 2.6%. In the long run (defined as longer than 1 year), price elasticity of demand is -0.58; a 10% hike in gasoline causes quantity demanded to decline by 5.8% in the long …show more content…

While the short run price and income elasticities of gasoline demand in the United States have been studied extensively, the vast majority of studies focused on consumer behavior in the 1970s and 1980s. There are a number of reasons to believe that the current demand elasticities differ from prior periods, as transportation analysts have hypothesized the behavioral and structural factors over the past several decades have changed the responsiveness of US consumers to changes in gasoline

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First Sarah and I reviewed the demand of gas throughout the years in PADD 1 to see if we can see any noticeable changes in demand and then see if we could correlate those to changes in prices. The first trend we were able to find was that the demand for gas would usually slightly raise in the summer but we could not correlate this to a change in price. This is because, as we read in the additional information provided, people tend to take more vacations and be more active in summer causing a higher demand of gas.

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490 Words | 2 Pages

To: Les Singer; Secretary, DOE From: Policy Group Office of Secretary Les Singer Subject: Answers for the reporters I know that there a many questions being asked in regards to gasoline prices and comments made by J.R. We as the policy group are doing the best that we can to work on answering all of your questions and coming up with explanations to make sure that you fully understand. The answer to your question on why price ceilings will prevent the laws of supply and demand from operating is actually quite simple, but before answering it you must understand what a price ceiling is.

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583 Words | 3 Pages

The global demand for gas has increased and so have the gas prices increased at the pump. Gas is important for everyday life and the cost should NOT be increasing. Big business would argue that gas prices are not the sign of a declining or struggling economy. They say that the fluctuation is natural and necessary to keep trade ongoing and competitive.

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547 Words | 3 Pages

Therefore, long run is more elastic that the other two-time periods. Price elasticity of supply and demand is the most essential because both concepts can relate to real life scenarios. Economics uses the example of excises taxes as a practical example of price elasticity of demand. (Pg.142). Governments tend to tax inelastic goods because the tax on them won’t lower the amount of that good

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1136 Words | 5 Pages

The energy crisis began after OPEC seized oil production because of the, “anger at the United States for aiding Israel.” (Farber, 22) This caused a mass panic amongst Americans and resulted in long waits to get gas and constant fuel outages. Carter was extremely adamant that Americans reduce their consumption of fuel in order to reduce the extent of the energy crisis, at one point suggesting putting heavy penalizing taxes on non-fuel efficient vehicles. Political journalist Nicholas Lemann recalled, “[The energy crisis was] the automotive equivalent to the Depression’s bank runs.”

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1270 Words | 6 Pages

Some examples that are inelastic are keyboards and pens. This concept of things being elastic or inelastic can also be incorporated into macroeconomics. Price elasticity of demand refers to the responsiveness of the consumers to a price change. For example some products that consumers are highly responsive to would be buying coffee at a coffee shop because a small price change can affect a large change in the quantity purchased. Since this product is highly responsive it correlates to this product being elastic.

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619 Words | 3 Pages

What I have just provided addresses the responsiveness, as our reading on page 415 points out, “Price elasticity of demand (Ep) The responsiveness of the quantity demanded of a commodity to changes in its price; defined as the percentage change in quantity demanded divided by the percentage change in price. To determine elasticity of demand it is important consider, availability of substitutes, Short-run versus long run, Percentage of income spent on the product.

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2179 Words | 9 Pages

The Grapes of Wrath is the story of the Joads, a family of farmers who, like many other families during the great depression, were forced from their land by landowners and banks. Throughout the story, the major theme that is seen consistently is discrimination. Tom Joad, the main character of the film, is released from jail on probation to find that his family is gone, and his land and home are completely vacant. Due to the drought and poor farming conditions in Oklahoma during the 1930’s, otherwise known as a region inside the “Dust Bowl”, the Joads only option was to head west to California which they were told was rich with opportunity and work. So, they travel across the nation on route 66, making several stops along the way, witnessing instances of both discrimination and generosity.

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1022 Words | 5 Pages

Even though many might say that driving is more convent, it is actually more harmful to the Earth. Biking or walking to places nearby can help cut down the carbon produced in the air. According to Jensen and McMillan, we can save about “575 million tons of carbon dioxide” if we cut down driving (Jensen and McMillan 706). This is telling us that if we try to cut back on the driving the air can be much cleaner because it is reducing how much carbon dioxide is exerted. Cutting back on driving is one of the many solutions that can help cut back on carbon dioxide production.

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117 Words | 1 Pages

No matter the cost of gas prices, the stations will still be full since one of America’s top natural resources is gas and if gas prices go down income follows as directly

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168 Words | 1 Pages

Another survey present that people were more inclined to buy automatic, high fueled cars than hybrids. This just goes to represent that society is playing a role in the high pollution

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In the 1970’s, the DOT found the total electricity saved throughout the US was about one percent every day DST was in effect (Source B). The United States claimed this was a result of people having more time in the afternoon to travel by automobile, causing an increase in gasoline consumption, this increase, however isn’t offset by a decrease of energy usage in the morning. (Source C). I order to challenge the DOTs claim; the National Bureau of Economic Research conducted their own experiment. Paradoxical to the initial intent of the policy, “DST results in an overall increase in residential electricity demand,” (Source F).

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809 Words | 4 Pages

The American Constitution stands on the principles and ideals of ancient, notable philosophers such as John Locke and Thomas Hobbes. Their ideas and theories lead to the development of one of the strongest nations in the world. Believing the best form of government is a democracy, John Locke expressed an optimistic and positive view of the nature of human beings describing them as cooperative and social creatures. On the other hand, Thomas Hobbes had a pessimistic view of the nature of human beings, describing them as selfish and war-like, and favored a total monarchy. Furthermore, although they have opposing views on human nature, they both have valid points.

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613 Words | 3 Pages

Have you ever been to the gas station and thought to yourself "why are these gas prices so high"? You may have even thought about cutting back some of your driving. When gas goes up it seems like the whole world may have turned their backs on you. In fact, Americans have an unquenchable thirst for gasoline. You could look at the amount of traffic on roads and highways, and you'll see that if a severe gas shortage were to happen it would cripple the United States into shambles.

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449 Words | 2 Pages

Most electrical powered cars can last around 50 miles before needing to be recharged. No Matter what people will not change because they are stubborn so I hope there is a low against gas cars.

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