Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 2 How Markets Work
Chapter 5 of 36 Elasticity and Its Application
Section 2 of 19
…
Consider when some event drives up the price of gasoline in the United States such as
· a war in the Middle East reduces supply of oil
· a booming Chinese economy boosts the world demand for oil
· a new tax on gasoline enacted by Congress, reducing demand
How much would consumption of gasoline fall?
This can be answered using a concept called elasticity.
…
Elasticity is a measure of how much buyers and sellers respond to changes in market conditions.
Many studies have examined consumers' response to gasoline prices.
They typically find the quantity demanded responds more in the long run than in the short run.
A 10% increase in gasoline prices today reduces gasoline consumption by
· about 2.5% after a year
· about 6.0% after five years
About half of the long-run reduction in quantity demanded is because people drive less and half because they switch to more fuel-efficient cars.
Both responses depend on the elasticity of demand.
… …
response to a change
henka e han'nō
変化へ反応

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