Download Unit05 - Eddie Jackson

Discussion
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points. Your postings should be qualitative and provide substantive depth
that advances the discussion.

Students are to post a minimum of three posts per Discussion topic. One initial response and
two replies to their classmates.

Posting on a minimum of three different days, for example: Wednesday, Friday and Monday.

The first post must be made by Saturday.
Discussion Topic
How have you responded to increases in the price of gasoline over the past
few years? How would you respond if the price of gasoline doubled over the
next two years?
Sadly, I
still have
to buy
gas
Edward Jackson
5/18/2013 2:25:22 PM
What alternatives do you have for buying gasoline? Could you change to
zero consumption of gasoline in the short run? In the long run?
Honestly, the amount of gas that I buy, now or in the past, has never been affected
by the fluctuating gas prices. With that said, and per our text, that would make
gasoline, for me, extremely inelastic; meaning that I buy the same amount of fuel
product, no matter the cost. However, if gas prices are higher than normal, it does
reduce my disposable income; meaning, I have less money to purchase other
products. Overall, the long-term effects could be really bad in a downed
economy. If gas prices were to double, or even triple, that would mean I would
have almost no disposable income, and that I would not be able to buy “extra” things
like electronics, or other products I just wanted. Businesses would suffer greatly;
they maybe even have to close their doors.
In the short run, when the price of gasoline increases, what happens to the
income you have to spend on other goods?
In the short run, my disposable income definitely decreases. This leads to budget
constraints, which is basically what I must give up to continue purchasing the same
amount (or quantity) of fuel. This may also lead to substitution, meaning that I may
buy products that have relatively lower prices. For example, rather than buying
General Mills Cheerios (which I like), I may buy the cheaper store brand (which I do
not like).
Krugman, P. & Wells, R. (2012). Microeconomics. New York, NY: Worth
Publishers.
----------------------------------------------------------Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net/
RE:
Gasoline
university page
5/19/2013 5:30:35 PM
Edward Jackson
You mentioned something pretty important, that you would have to buy a smaller car if gas
prices doubled. This is important because it's one of the variables that should be factored into
computing supply and demand and consumer behavior. For example, as gas prices continue
to climb, my consumption remains the same in the short-term, even though my disposable
income goes down. If gas prices continued to rise, well into a long-term, efficiency of my
resources comes into question. I start looking for cheaper gas (as a substitute), or eventually
a more fuel efficient car.
----------------------------------------------------------Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net/
RE: The
Rational
Consumer
Edward Jackson
university page
5/19/2013 5:51:20 PM
You bring up several valid ways to deal with rising gas prices. There is something else I have
noticed in recent times, as far as the industry is concerned; that is the creation of more fuel
efficient cars by the thousands. I mean, fuel efficient cars have been around a long time, but
not a de facto standard. Americans are known for their big, gas guzzling cars. What I see are
more and more fuel efficient cars being made, gas consumption going down considerably, and
our disposable income increasing. This means that our consumption bundle will be
changing. Think about it like this, if you use to spend $120 a month for gas...but now you
spend $40; that is an extra $80 dollars you can use to buy other products on the market. I
like the way this sounds.
----------------------------------------------------------Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net/
university page