Gasoline Inelastic Essay

I do believe that gasoline is very inelastic. The reason I say that gasoline is an inelastic product is because changes in prices have small influence on its demand. For example, even if the price of gasoline triples the next day, people will still buy gasoline to get to their destination. Current prices on gasoline are likely to have a larger impact on consumer spending, and a smaller impact on the quantity of gasoline bought. Instead, gasoline prices would most likely affect other areas of spending like entertainment, electronics, vacations, and etc. In the short term, it would be difficult to reduce gas consumption. It would be much more profitable to cancel “road trips”, or buy a car with better gas mileage. However, some people aren’t

Even though, the only substitutes for gasoline are public transportation, which isn’t always accessible, or electric cars, which is still considered a recent technology. If you’re living in a suburb in Chicago with good public transportation, you could start using these options to get to your destination, this would reduce your demand for gas by a lot. Yet, if you live in a suburban area, you would be more reliant on a vehicle, and your demand for gas would become inelastic. The short and long term demands for goods and services can vary, and this affects elasticity. For example, if the person’s gas demand was inelastic in the short-term, this could eventually become elastic in the long term. This person could buy a car that has better mileage, or buy an electric car which doesn’t require gasoline. For most products, long-term demands happen to be more elastic than short-term demands. Since gasoline is with a finite supply, it would eventually run out in the long-term. Yet, in the short-term inelasticity tends to overcome compared to the long-term. If we all drove vehicles that could go 50 mpg or greater gasoline would still be