Price Elasticity of Demand & Supply
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Could you assist is finding at least two websites or articles to help you answer the following questions about the petroleum industry. It is to be done is summary of the major points of the article or Web site, and to be referenced.
o In the petroleum industry, is price elasticity of demand considered elastic or inelastic? Are there substitutes available? Is the good a luxury or a necessity? Explain.
o What is the price elasticity of supply for the petroleum industry? Explain
o Research any negative or positive externalities the petroleum industry produces. Does the transaction of a buyer and seller directly affect a third party? Is the effect a negative or positive externality? How does the externality impact the economy?
o Research whether the petroleum industry produces public goods or private goods, or is a natural monopoly. Are the goods or resources rival, excludable, or neither? Explain.
o Describe any current or past news events related to wage inequality in the petroleum industry.
o What was the petroleum industry's method for determining that there was an inequality? Explain.
o How have monetary and fiscal policies affected the employment rates for the petroleum industry?
o How have monetary and fiscal policies affected the growth of the petroleum industry?
o How have monetary and fiscal policies affected the prices of the product the petroleum industry produces?
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The response addresses the queries posted in 980 Words, APA References.
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The response addresses the queries posted in 1277 words with references.
//Before writing the solutions of the given questions firstly, we have to understand the concept of price elasticity and supply under the heading of introduction, for example: //
Introduction
Price elasticity of demand is defined as the percentage change in quantity demanded of a product due to percentage change in its price, other things remaining constant. Price elasticity of supply refers to the percentage change in quantity supplied of a product due to the percentage change in its price (Dwivedi, 2005).
Price Elasticity of Demand & Supply
//Above we have discussed about the price elasticity and its importance. As per the direction to give the solutions of the various points we have to understand the economic environment of petroleum industry. The solutions I and 2, which I am going to given are well enough to explain you about the price elasticity of demand and supply in petroleum industry. You are free to add your views in these solutions. //
Solution 1.
In the petroleum industry, price elasticity of demand is considered relatively inelastic, especially in the short-run. There are few substitutes for purchasing petrol, especially in the short-run. When the price of a gallon of gas rises from $1 a gallon to $1.10, there is a 10% increase, but the quantity ordered decreases very little - from 20 gallons to 19, a 5% decrease. The resultant price elasticity of demand is 0.5%. This shows that there is a little decrease in the demand of petrol as its prices increases (Kaplan, 2002).
There are some substitutes which are accessible but there are not many or well developed. Gas and crude oil are still the main source for energy. The available substitutes are solar energy, ethanol, public transportation, moving closer to work, buying more fuel efficient cars, and fusion vehicles which run on electrical energy thereby reducing the need for large amounts of gas.
Most of the people consider petroleum as a good of necessity. Petroleum for heating is a basic need for everyone and ...
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