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Discussion This is important information that will ensure that you earn maximum 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