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Economics Gasoline Paper

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      Most Americans are very knowledgeable when it comes to the understanding the price of gasoline.   Since the early price hikes in this country, consumers have had high anxiety when the price of gas changes.  Understanding the causes for shifts in supply and demand and how they influence price, quantity, and market equilibrium is essential to knowing why gas increases and decreases.  Commodities like gas fluctuate daily and learning how to decipher whether gas is a luxury or necessity will help us learn more about the market.  Explaining how the necessity of a good and the availability of substitutes impact the price elasticity of the product are also essential.  These points and others will allow a person to see that gas is a commodity that will be used for many years to come.
      The law of demand states that as price increases, the quantity increases.  This is not always true with gasoline and the price does not always change the quantity used.  Gasoline affects shifts in supply and demand because what happens in other countries, the market competition, and the state regulations.  People need gas to drive to work or drive their children to school and in most cases are willing to pay the high prices to keep their lives moving forward.  According to the Federal Trade Commission (2005) website during 2004 and 2005, United States consumers spent millions of dollars more on gasoline than they had anticipated.  Not only do high gas prices affect the people, it affects our businesses.  For example, when a furniture store has deliveries, they are driving all over the state.   The high cost of gasoline will force the company to raise delivery prices and the consumer to buy less furniture.   This is also true when countries that supply our gas go through economic hardships or even war.   We are the economy that usually suffers.  When price hikes happen due to the suppliers, the supply is still decreasing, which keeps the prices high.  If there is an oversupply...

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