Thursday, April 24, 2008
Why are Gas Prices Rising?
$4 Gas is all the talk and everyone wants to know why. How much gas are consumers demanding? The answer is the top graph (recall quantity demanded equals quantity supplied). Are they responding to changes in price? The answer is comparing the top to the bottom graph. Why are they not responding to rising prices by decreasing their demand (much)? See here. Download the data for the graph here.