Introductory to Micro-Economics 1011-107Dr. PryorNovember 25, 1996. Back in the middle of October, the price of natural-gas had risen because a gascompany was forced to shut down a pipeline due to the need for repairs. This impendingshortage led to the decrease in prices for other heating commodities, as well as largerprofits. The demand for energy was becoming greater and greater because it was thattime of year when consumers began storing energy in their homes to prepare for the coldwinter months ahead.
The four commodities mentioned in this article, crude oil, heating oil, gasoline andnatural gas are all substitutes for one another. This is true because the cross elasticity ofdemand states that as the percentage change in the quantity demanded of one commodityresults from a one percent change in the price of another commodity. In other words, theincrease in demand for crude oil, gasoline, and heating oil was the outcome of the priceincrease in natural gas. As shown in the graph below, the cross elasticity of demand is direct (positive).
As the price of natural increases, the quantity demanded for the three other energycommodities increase. The market system today functions on price. Consumers make their decision onwhat to buy by the price of their desired good. Naturally, consumers will choose thelower price of a commodity they wish to purchase. This is why consumers, wanting toheat their homes, chose to heat them with natural-gass substitutes (crude oil, heating oil,or gasoline) rather than the natural-gas, the higher priced commodity. The commodity,energy, is something that people can not go without during the winter months.
If their is ashortage, which means that consumers demand more than the available supply, it leads toan increase in price. As shown in the graph below, as the supply decreases, the price increases. Thismeans that the price is inelastic. This is true because as the price of the commodity isincreased, the total amount spent on the commodity will increase also.
The price mechanism reflects scarcity, which is stated as the greater demand for agood, energy, (because of the desire to store it for the colder months ahead) with the samesupply of that good becoming scarce resulting in a higher price. Consumers demand for energy changes with the seasons. For example, thedemand for energy in the summer is probably very low. The demand for energy in the fallwill be higher because consumers begin storing it for the winter. And during the wintermonths the demand is high, where as during the spring months the demand decreases fromthe other months. This commodity is greatly influenced by the climate and the type ofregion consumers live in.
For example, people in Florida do not have the same type ofenergy bill as the people in Pennsylvania do. The market of a commodity is determined by many things, one of those being thenature of the commoditys prices, which is influenced by the demand of that particularcommodity. For the commodity, energy consumers can see that the quantity demanded isvery sensitive to changes in prices. And factors such as climate and the region in whichthey live underlie the market demand curve for this commodity.
Jennifer Loughery 082970Introductory to Micro-Economics 1011-107Dr. PryorNovember 25, 1996. Back in the middle of October, the price of natural-gas had risen because a gascompany was forced to shut down a pipeline due to the need for repairs. This impendingshortage led to the decrease in prices for other heating commodities, as well as largerprofits. The demand for energy was becoming greater and greater because it was thattime of year when consumers began storing energy in their homes to prepare for the coldwinter months ahead.
The four commodities mentioned in this article, crude oil, heating oil, gasoline andnatural gas are all substitutes for one another. This is true because the cross elasticity ofdemand states that as the percentage change in the quantity demanded of one commodityresults from a one percent change in the price of another commodity. In other words, theincrease in demand for crude oil, gasoline, and heating oil was the outcome of the priceincrease in natural gas. As shown in the graph below, the cross elasticity of demand is direct (positive). As the price of natural increases, the quantity demanded for the three other energycommodities increase. The market system today functions on price.
Consumers make their decision onwhat to buy by the price of their desired good. Naturally, consumers will choose thelower price of a commodity they wish to purchase. This is why consumers, wanting toheat their homes, chose to heat them with natural-gass substitutes (crude oil, heating oil,or gasoline) rather than the natural-gas, the higher priced commodity. The commodity,energy, is something that people can not go without during the winter months. If their is ashortage, which means that consumers demand more than the available supply, it leads toan increase in price. As shown in the graph below, as the supply decreases, the price increases.
Thismeans that the price is inelastic. This is true because as the price of the commodity isincreased, the total amount spent on the commodity will increase also. The price mechanism reflects scarcity, which is stated as the greater demand for agood, energy, (because of the desire to store it for the colder months ahead) with the samesupply of that good becoming scarce resulting in a higher price. Consumers demand for energy changes with the seasons. For example, thedemand for energy in the summer is probably very low.
The demand for energy in the fallwill be higher because consumers begin storing it for the winter. And during the wintermonths the demand is high, where as during the spring months the demand decreases fromthe other months. This commodity is greatly influenced by the climate and the type ofregion consumers live in. For example, people in Florida do not have the same type ofenergy bill as the people in Pennsylvania do.
The market of a commodity is determined by many things, one of those being thenature of the commoditys prices, which is influenced by the demand of that particularcommodity. For the commodity, energy consumers can see that the quantity demanded isvery sensitive to changes in prices. And factors such as climate and the region in whichthey live underlie the market demand curve for this commodity. Jennifer Loughery 082970Introductory to Micro-Economics 1011-107Dr. PryorNovember 25, 1996.
Back in the middle of October, the price of natural-gas had risen because a gascompany was forced to shut down a pipeline due to the need for repairs. This impendingshortage led to the decrease in prices for other heating commodities, as well as largerprofits. The demand for energy was becoming greater and greater because it was thattime of year when consumers began storing energy in their homes to prepare for the coldwinter months ahead. The four commodities mentioned in this article, crude oil, heating oil, gasoline andnatural gas are all substitutes for one another.
This is true because the cross elasticity ofdemand states that as the percentage change in the quantity demanded of one commodityresults from a one percent change in the price of another commodity. In other words, theincrease in demand for crude oil, gasoline, and heating oil was the outcome of the priceincrease in natural gas. As shown in the graph below, the cross elasticity of demand is direct (positive). As the price of natural increases, the quantity demanded for the three other energycommodities increase. The market system today functions on price.
Consumers make their decision onwhat to buy by the price of their desired good. Naturally, consumers will choose thelower price of a commodity they wish to purchase. This is why consumers, wanting toheat their homes, chose to heat them with natural-gass substitutes (crude oil, heating oil,or gasoline) rather than the natural-gas, the higher priced commodity. The commodity,energy, is something that people can not go without during the winter months. If their is ashortage, which means that consumers demand more than the available supply, it leads toan increase in price. As shown in the graph below, as the supply decreases, the price increases.
Thismeans that the price is inelastic. This is true because as the price of the commodity isincreased, the total amount spent on the commodity will increase also. The price mechanism reflects scarcity, which is stated as the greater demand for agood, energy, (because of the desire to store it for the colder months ahead) with the samesupply of that good becoming scarce resulting in a higher price. Consumers demand for energy changes with the seasons. For example, thedemand for energy in the summer is probably very low.
The demand for energy in the fallwill be higher because consumers begin storing it for the winter. And during the wintermonths the demand is high, where as during the spring months the demand decreases fromthe other months. This commodity is greatly influenced by the climate and the type ofregion consumers live in. For example, people in Florida do not have the same type ofenergy bill as the people in Pennsylvania do.
The market of a commodity is determined by many things, one of those being thenature of the commoditys prices, which is influenced by the demand of that particularcommodity. For the commodity, energy consumers can see that the quantity demanded isvery sensitive to changes in prices. And factors such as climate and the region in whichthey live underlie the market demand curve for this commodity. Jennifer Loughery 082970Introductory to Micro-Economics 1011-107Dr. PryorNovember 25, 1996.
Back in the middle of October, the price of natural-gas had risen because a gascompany was forced to shut down a pipeline due to the need for repairs. This impendingshortage led to the decrease in prices for other heating commodities, as well as largerprofits. The demand for energy was becoming greater and greater because it was thattime of year when consumers began storing energy in their homes to prepare for the coldwinter months ahead. The four commodities mentioned in this article, crude oil, heating oil, gasoline andnatural gas are all substitutes for one another.
This is true because the cross elasticity ofdemand states that as the percentage change in the quantity demanded of one commodityresults from a one percent change in the price of another commodity. In other words, theincrease in demand for crude oil, gasoline, and heating oil was the outcome of the priceincrease in natural gas. As shown in the graph below, the cross elasticity of demand is direct (positive). As the price of natural increases, the quantity demanded for the three other energycommodities increase. The market system today functions on price.
Consumers make their decision onwhat to buy by the price of their desired good. Naturally, consumers will choose thelower price of a commodity they wish to purchase. This is why consumers, wanting toheat their homes, chose to heat them with natural-gass substitutes (crude oil, heating oil,or gasoline) rather than the natural-gas, the higher priced commodity. The commodity,energy, is something that people can not go without during the winter months.
If their is ashortage, which means that consumers demand more than the available supply, it leads toan increase in price. As shown in the graph below, as the supply decreases, the price increases. Thismeans that the price is inelastic. This is true because as the price of the commodity isincreased, the total amount spent on the commodity will increase also. The price mechanism reflects scarcity, which is stated as the greater demand for agood, energy, (because of the desire to store it for the colder months ahead) with the samesupply of that good becoming scarce resulting in a higher price.
Consumers demand for energy changes with the seasons. For example, thedemand for energy in the summer is probably very low. The demand for energy in the fallwill be higher because consumers begin storing it for the winter. And during the wintermonths the demand is high, where as during the spring months the demand decreases fromthe other months. This commodity is greatly influenced by the climate and the type ofregion consumers live in. For example, people in Florida do not have the same type ofenergy bill as the people in Pennsylvania do.
The market of a commodity is determined by many things, one of those being thenature of the commoditys prices, which is influenced by the demand of that particularcommodity. For the commodity, energy consumers can see that the quantity demanded isvery sensitive to changes in prices. And factors such as climate and the region in whichthey live underlie the market demand curve for this commodity. Jennifer Loughery 082970Introductory to Micro-Economics 1011-107Dr. PryorNovember 25, 1996.
Back in the middle of October, the price of natural-gas had risen because a gascompany was forced to shut down a pipeline due to the need for repairs. This impendingshortage led to the decrease in prices for other heating commodities, as well as largerprofits. The demand for energy was becoming greater and greater because it was thattime of year when consumers began storing energy in their homes to prepare for the coldwinter months ahead. The four commodities mentioned in this article, crude oil, heating oil, gasoline andnatural gas are all substitutes for one another. This is true because the cross elasticity ofdemand states that as the percentage change in the quantity demanded of one commodityresults from a one percent change in the price of another commodity.
In other words, theincrease in demand for crude oil, gasoline, and heating oil was the outcome of the priceincrease in natural gas. As shown in the graph below, the cross elasticity of demand is direct (positive). As the price of natural increases, the quantity demanded for the three other energycommodities increase. The market system today functions on price.
Consumers make their decision onwhat to buy by the price of their desired good. Naturally, consumers will choose thelower price of a commodity they wish to purchase. This is why consumers, wanting toheat their homes, chose to heat them with natural-gass substitutes (crude oil, heating oil,or gasoline) rather than the natural-gas, the higher priced commodity. The commodity,energy, is something that people can not go without during the winter months. If their is ashortage, which means that consumers demand more than the available supply, it leads toan increase in price. As shown in the graph below, as the supply decreases, the price increases.
Thismeans that the price is inelastic. This is true because as the price of the commodity isincreased, the total amount spent on the commodity will increase also. The price mechanism reflects scarcity, which is stated as the greater demand for agood, energy, (because of the desire to store it for the colder months ahead) with the samesupply of that good becoming scarce resulting in a higher price. Consumers demand for energy changes with the seasons. For example, thedemand for energy in the summer is probably very low. The demand for energy in the fallwill be higher because consumers begin storing it for the winter.
And during the wintermonths the demand is high, where as during the spring months the demand decreases fromthe other months. This commodity is greatly influenced by the climate and the type ofregion consumers live in. For example, people in Florida do not have the same type ofenergy bill as the people in Pennsylvania do. The market of a commodity is determined by many things, one of those being thenature of the commoditys prices, which is influenced by the demand of that particularcommodity. For the commodity, energy consumers can see that the quantity demanded isvery sensitive to changes in prices.
And factors such as climate and the region in whichthey live underlie the market demand curve for this commodity. ————————————————————–
