Key Idea 2 - Bullet 13
Gas is so important, that people are willing to pay around $5 for a gallon of gas. When gas prices drop, consumers less then they are willing too, which relates to consumer surplus.
Key Idea 2 - Bullet 13
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» Key Idea 2 - Bullet 13
so this also means that gas is inelastic because people are willing to pay for it at such a high price
People are willing to pay for the gas, but they do other things to compensate, such as limit their driving by taking bus or car pooling. They also might switch to a job closer to where they live.
But that does just show how inelastic gasoline is, the fact that so many people would rather alter their lifestyles and still pay $5 a gallon for gasoline, rather than just stop driving altogether.
That's because driving is the most convenient way to go to work, which is people's main source of income. By taking the bus, they have to be ready at a certain time, be at a bus stop, deal with standing on the bus, and a slow moving bus.
Petroleum is used not only for cars but for producing things such as plastic which many people do not realize so i agree that it is inelastic
What else is made of petroleum (thus creating greater inelasticity)?
lots of things are made from petroleum (causing greater inelasticity) such as ink, pain, ammonia, crayons and cosmetics jsut to name a few so basically everyday things people use are made of petroleum.
I think it's pretty fascinating how there is an entire branch of engineering specifically relating to the study of petroleum and how it can be utilized in different ways.
too bad hardly any colleges offer petroleum engineering but good thing they are starting to hire chemical engineers! Take some geology courses, gonna need it if you wanna go into that kinda stuff
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