Question
In: Economics
2. “It wouldn't matter if you raised the price of gas to $5 per gallon, consumption...
2. “It wouldn't matter if you raised the price of gas to $5 per gallon, consumption of gas would not change, because people need gas.” Does this make any sense? Use a graph in your answer.
Solutions
Expert Solution
Ques2-
Ans 2-Yes, the statement that the demand or consumption of gas will not change even though when the price increases to $5 per gallon absolutely makes sense.This is because when a commodity is a necessity it becomes important for human survival,the demand for it is generally inelastic i.e it doesn’t change with the change in price.As you can see in the graph provided above.
As shown in the graph even when the price increases to $5 of gas the demand remains the same i.e it is inelastic and Ed i.e the change in demand due to change in price is zero(0).
Rahul Sunny answered 2 years agoRelated Solutions
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below for a random selection of weeks in
2015
.
Oil (
$
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2.269
52.08
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7,3718,4725,0.54,714
7,4716,5915,0.724,865
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8,4983,602,0.602,540
9,4897,2449,0.511,464
9,4258,4686,0.517,547
8.5,4574,2619,0.551,460
9,3721,4746,0.544,566
8,3448,5399,0.548,577
7.5,3846,9061,0.579,631
8,4188,5975,0.563,574
9,3601,4650,0.493,534
7,3640,6905,0.518,571
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8,3063,6524,0.578,577
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7,3745,2611,0.508,591
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Additional Cost - ZylexB
Material
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Suppose gas costs $3 a gallon and the average car gets 28 miles per gallon. If...
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