As we have all been impacted by the increasing price of gasoline over the last two years. I found an article on the Internet written by Jerome S. Paige and Associate, which is titled "Impacts of Rising Gasoline Prices - A Discussion and Policy Framework." This article was written in September of 2005 and outlines several findings and economic impacts to metropolitan Washington due to the increasing price of gasoline. The main point of the article is to discuss the responsiveness to the ever-increasing gas prices.
The article states that even though gas prices have been increasing the demand for gas has not decreased in Washington and in some cases has actually increased. Also the use of public transportation has not increased due to the higher gasoline prices. According to our David C. Colander, the Law of Demand states "Quantity demanded rises as price falls, other things constant or alternatively Quantity demanded falls as price rises, other things constant (Ch.
US gasoline prices 1974-2004
US gasoline prices from 1919 to 2007. Real and nom...
English: Long-term chart showing average gasoline ...3, p. 2)." In this case the increase price of gasoline has not reduced the quantity demand for the product. There may be shift factors impacting the increasing demand for gasoline even though the price has also been increasing such as, a rise in income and prices of other goods. The conclusion must be that other area of the consumer market must be impacted, such as reduced consumption of other goods and services to make up for the increasing cost of gasoline.
The article goes on to state that in the short run consumers are not adjusting their driving habits but over time and the continual increase of gas prices may lead consumers to carpool or change their driving habits and reduce the number of miles that they are driving on average. Households with below average incomes for the region...