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Week 1 Article Analysis

In: Business and Management

Submitted By elizabeth78
Words 868
Pages 4
Week 1
Eco 365

Article Analysis The name of the article on this paper is OP-ED: Falling Gasoline Use Means U.S. Can Just Say No to New Pipelines and Food-to-Fuel. Through this paper, we have to analyze the basis for the trends in consumption patterns. Consider the utility derived from a product or service mentioned in the article. Describe what has occurred to change the demand for the product or service and its market and equilibrium prices. Describe what has occurred to change the supply of the product or service and its market and equilibrium prices. In your opinion, is demand for this product or service price elastic or inelastic? What does this imply about how consumers respond to changes in the price of this product or service? According to an article from the Inter Press Service, gasoline consumption trends have been declining (Larson, 2013). The declined gasoline consumption has an effect on the utility that is derived from the product. There are different reasons for the decrease that include individuals using different means of transportation, use of other fuels, and decreased sales. Although the price of gasoline has risen, and is still rising, the product is still to considerably inelastic. The inelastic price on gasoline affect the economy in all ways.
The decline in gasoline consumption has an effect on the utility of the product including the decline of usefulness of the product among consumers, but still needing the product for exports in the United States. Although the product is not as useful for consumers, it is still a need amongst transportation. Individuals need the gasoline as a way of transportation to work, school, doctor’s appointments etc. Aside from consumers, the product is a need for exports in the United States economy. At the same time, gasoline is need to the distribution of many products in the United States. Prices of gasoline affect the prices on everything.
There have been occurrences that have changed the demand of gasoline among consumers although the supply remained the same. Occurrences that have changed the demand of the product include the decline in car fleet, less driving among individuals, more fuel-efficient cars, the decline in registered vehicles, decline in new car sales, and the number of Americans living in urban areas (Larson, 2013). Another factor includes more people living in urban areas. With more individuals in urban areas, there are more carpooling, bike sharing, and public transit such as buses, taxis, subways, etc. With more people carpooling or bike sharing, there is less gasoline demand than if the individuals drove their own personal cars every day.
In reverse to the change of demand versus supply, there are also occurrences that have changes the supply of gasoline while the demand remains the same. Occurrences that have changed the supply of gasoline include the increased use of natural gases as opposed to gasoline. The United States is using more natural products, such as corn as an environmentally friendly source of fuel. Previously, the demand for corn was down, and the exports for gasoline was up, but today, with the use of corn being used as a form of fuel, the exports for gasoline goes down which changes the supply of gasoline.
Although the prices in gasoline are on the rise, and probably will be rising for years down the road, the product may be considered as inelastic rather than elastic. To define elastic simply, the price change of a good effects the demand of a product (Investopedia, n.d.). To define inelastic is opposite of elastic. No matter how high the price of a product may be, the product is still a need for individuals and they will still purchase the item. Gasoline is inelastic because although the prices may rise outrageously, individuals will keep purchasing the item because of the need for transportation. Consumers frown upon the higher gasoline prices, especially when they rise up to $4.00 per gallon, but even with the rise in prices, the individuals still need means to transport to work, school, appointments, childcare, etc. No matters if the price rise more than $ 4.00 per gallon gasoline in a essential product that we need.
The rise in gasoline prices has affected the consumption trends of the product. With the higher prices, individuals drive less, purchase less vehicles, take less vacations long distance, and ride together in vehicles to save money for themselves causing the consumption of the product to decrease. With more natural and environmentally friendly fuels being at use, the consumption rate also drops for gasoline, but the product today is still a need for individuals because they need a way to transport. The demand for the product is up; therefore, the product is a necessity for everyday living among individuals.

References
Investopedia. (n.d.). Elastic. Retrieved from Investopedia: http://www.investopedia.com/terms/e/elastic.asp
Larson, J. (2013). OP-ED: Falling Gasoline Use Means U.S. Can Just Say No to New Pipelines and Food-to-Fuel. Retrieved from Inter Press Service: http://www.ipsnews.net/2013/03/op-ed-falling-gasoline-use-means-u-s-can-just-say-no-to-new-pipelines-and-food-to-fuel/

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