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Generally the price of petroleum is inelastic. The amount demanded does not decrease significantly with price. The fundamental reason is that our infrastructure is dependent on petroleum and we can not easily switch to another fuel source without significant upheaval in our infrastructure.
For example, when petroleum prices rise people reduce the amount the drive but the can rarely eliminate it.
Wiki User
∙ 13y ago
Wiki User
∙ 14y agoelastic - also called transitory demand.
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Are cereal companies inelastic or elastic?
no cereal companies are not inelastic because there is not a crucial demand for cereal if cereal companies were too raise the price of cereal to an ridiculously price there is a good chance that consumers will stop buying so that makes cereal elastic.........examples of inelastic companies are industries like pharmacuticals,oil , higene etc. things that we need.
Why gasoline is inelastic?
Elastic if there are substitutes which is unlikely but possible as green energy is a growing market Inelastic if there are no substitutes which is mostly the case as in the case of oil, the price is set by the supplier and the consumer relies heavily on it.
Why did OPEC fail to keep the price of oil high?
This episode shows how supply and demand can behave differently in theshort run and in the long run. In the short run, both the supply and demand for oilare relatively inelastic. Supply is inelastic because the quantity of known oil reservesand the capacity for oil extraction cannot be changed quickly. Demand is inelasticbecause buying habits do not respond immediately to changes in price.
Why is the concept of price elasticity of demand potentially very useful for a business?
Role of price elasticity in business decision: See every producer has to decide the price of a product ar which he has to sell it.While deciding it,price elasticity of demand becomes important for him.If the demand of his productis less elastic,he will fix up a higher price or vice-versa. The concept of price easticity helps the producers` when they havetodetermine the price of jointlypouced goods. For example: oil and oil cakes are two joint goods.If the demand for oil is inelastic as compared to the demand for oil cakes,a higher price for oil is charged.
Is oil a commodity?
Yes oil is a commodity....
Is gasoline a commodity price elastic or price inelastic?
Elastic if there are substitutes which is unlikely but possible as green energy is a growing market Inelastic if there are no substitutes which is mostly the case as in the case of oil, the price is set by the supplier and the consumer relies heavily on it.
Is oil elastic?
Version:1.0 StartHTML:0000000105 EndHTML:0000002991 StartFragment:0000002527 EndFragment:0000002955 Price elasticity of demand (PED) is defined as the measure of responsiveness in the quantity demanded for a commodity as a result of change in price of the same commodity. It is a measure of how consumers react to a change in price. Oil is inelastic, as it has few substitutes and the product is considered a necessity.
Are cereal companies inelastic or elastic?
no cereal companies are not inelastic because there is not a crucial demand for cereal if cereal companies were too raise the price of cereal to an ridiculously price there is a good chance that consumers will stop buying so that makes cereal elastic.........examples of inelastic companies are industries like pharmacuticals,oil , higene etc. things that we need.
Why gasoline is inelastic?
Elastic if there are substitutes which is unlikely but possible as green energy is a growing market Inelastic if there are no substitutes which is mostly the case as in the case of oil, the price is set by the supplier and the consumer relies heavily on it.
Why did OPEC fail to keep the price of oil high?
This episode shows how supply and demand can behave differently in theshort run and in the long run. In the short run, both the supply and demand for oilare relatively inelastic. Supply is inelastic because the quantity of known oil reservesand the capacity for oil extraction cannot be changed quickly. Demand is inelasticbecause buying habits do not respond immediately to changes in price.
Why is the concept of price elasticity of demand potentially very useful for a business?
Role of price elasticity in business decision: See every producer has to decide the price of a product ar which he has to sell it.While deciding it,price elasticity of demand becomes important for him.If the demand of his productis less elastic,he will fix up a higher price or vice-versa. The concept of price easticity helps the producers` when they havetodetermine the price of jointlypouced goods. For example: oil and oil cakes are two joint goods.If the demand for oil is inelastic as compared to the demand for oil cakes,a higher price for oil is charged.
Is oil a commodity?
Yes oil is a commodity....
Which is the largest commodity exchange for commodity market?
Oil is that commodity.
What are three applications of supply demand and elasticity?
Most economists agree on the application of supply, demand & elasticity. Here three examples of these factors in the world of economics: A. The demand for food is for the most part "inelastic" because food is inexpensive and a necessity. Concurrent with new technologies in agriculture, this has ironically has reduced total revenue paid to the farming sector; B. Oil as an example. In the 1970's OPEC reduced the supply of oil in order raise its price. Yes, in the short run, the demand for this product ( never a cheap one as agriculture above ) tended to be inelastic as consumers were pressed to find substitutes. As expected, the decrease of this essential commodity raised prices & profits for OPEC. Long term, however, more fuel efficient automobiles and other sources of energy such as increased gas & oil production caused the oil demand towards elasticity, inducing producers to search for more oil causing this commodity to become more elastic. Thus the short term run up in prices did not carry into the long run. Result: back to normalcy. C. Illegal drug market. The short term demand for additive drugs is relatively inelastic. Government policies & practices dove tail to enhance the climb in price for drugs. Yet consumption, based on addiction, remains level and revenue paid by users increases. This places pressure on users to increase their own revenues and perhaps causes crime rates to rise to fund their addictions. Studies however show that long term drug usage must level out. The price in this example reduces demand and we see elasticity. Law enforcement, price reduce demand which reduces total revenue, and this industry flattens out. The above examples enable the economist to analyze important events and policies that shape the economy.
Why is oil a strategic commodity?
A strategic commodity is considered to be very important. This is a resource that is important to a country that a country will go to any extent to ensure its consistent supply. A good example is oil which is used in every industry that you can think of.
Why is oil inelastic?
because its used with material
What commodities would be good to trade in the future?
"Commodities that good to trade in the future will be ones that will still be high in demand, whether or not the supply will be able to meet that demand. For example, oil will be a good commodity to trade in the future."
