This is a short summary of the paper
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Heating Commodities
Start of Term Paper
Back in the middle of October, the price of natural-gas had risen
because a gas company was forced to shut down a pipeline due to the need for
repairs. This impending shortage led to the decrease in prices for other
heating commodities, as w .... Middle of Term Paper
... oil was the outcome of the price increase in natural
gas.
As shown in the graph below, the cross elasticity of demand is direct
(positive). As the price of natural increases, the quantity demanded for the
three other energy commodities increase.
The market system today functions on price. Consumers make their
decision on what to buy by the price of their desired good. Naturally,
consumers will choose the lower price of a commodity they wish to purchase.
This is why consumers, wanting to heat their homes, chose to heat them with
natural-gas's substitutes (crude oil, heating oil, or gasoline) rather than the
natural-gas, the higher priced ... |
| Number of Words: 543 |
Approximate Pages: 2 |
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