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Social Unrest 1940 and 1930

In:

Submitted By edlicer
Words 1184
Pages 5
introduction Page 3
Consumer Response to Changes in gas prices Page 3
Price Elasticity Page 4
Suppliers Response to Price Changes Page 4
Equilibrium Prices under low price elasticity Page 5
What Causes Gas Prices to Increase Page 6
Opportunity Cost Page 7
Conclusion Page 7

Introduction
Prices are set by demand and supply. When supply falls, prices rise quickly. The demand for oil continues to hit a record high. Countries like China and India are consuming it more frequently as they industrialize, but cars and power factories. However, the supply of gasoline has been restricted by certain requirements forcing oil refiners to manufacture different gasoline for an assortment of purposes. The price of gasoline reflects producers’ costs and consumer’s willingness to pay. Gasoline prices tend to rise if the cost to produce and supply such commodity rises, or if people decide to buy less gas at the current price (when supply is greater than demand). The price of gasoline will stop rising or falling when a price is reached at which quantity demanded is equal to quantity supplied by producers, otherwise known as equilibrium.

Consumer Response to changes in the price of gas

3

The rising price of gas will affect consumer spending rather than significantly impacting the amount of gasoline being purchased. The major aspect of the consumer life affected by the spike in gasoline prices is the change made to their expenditures across a range of industries such as clothing, food, electronics and purchasing smaller vehicles that is more economical. Price elasticity plays a prominent role in how consumers respond to changes in the price of gas. This is evident because the price elasticity of a product usually decreases the quantity demanded of that product when there is an increase in the price of

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