Dollars and Jens
Saturday, September 17, 2005
Elasticity of Demand for Gasoline
Too much can be made over the fact that the quantity of gasoline demanded has plummetted; if the gasoline just isn't there, consumers can pound their high-chairs (or pay up) all they want, and in the short-term, it won't generate any more supply. But combined with the fact that prices haven't doubled, this indicates that people are responding to incentives. All summer, people have already had some incentives, relative to last year, to use less gasoline, and I wonder if that helped. But the graph doesn't show much change until well into August.

Anyway, I thought you might be interested.

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