Gas Demand

It is clear that when gas prices began to rise dramatically after Hurricane Katrina, people were bothered with how high the prices were, but it still did not stop them from getting gas. People in the United States will not just automatically decide to walk or take a bike to work, because they believe that the price of gas is too high for them. And people will definitely not decide to quit their jobs. We need an income and if it requires us driving to a certain place to have an income, then I am 90% certain that people will pay the price to go receive money for their labor. Gas is a necessity here in America. So regardless of how high the price may be, people will continue to pay the price.

In economics, the price elasticity of demand (PED) is an elasticity that measures the nature and degree of the relationship between changes in quantity demanded of a good and changes in its price(). So basically, if the price of a good falls it is anticipated that there will be an increase in the quantity demanded or the other way around. When the price elasticity of demand for a good is elastic (|Ed| > 1), the percentage change in quantity is greater than that in price. Hence, when the price is raised, the total revenue of producers falls, and vice versa(). So, the amount by which quantity changes as price changes is the percentage change in quantity to the percentage change in price (% Change in Quantity / % Change in Price).

With the price of gas reaching higher levels than usual across the country, the mean and women who devour the gas as well as the people who make the policies have evolved to understand the theory of demand elasticity. Gasoline cannot be substituted at all or very easily. In most of the United States, gasoline is a necessity and does not affect most people's budget .Economists help determine the price of gas, because