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Beginning of Paper
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Heating Commodities
Jennifer Loughery 082970
Introductory to Micro-Economics 1011-107
November 25, 1996.
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 ....
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Middle of Paper
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.... rather than the
natural-gas, the higher priced commodity. The commodity, energy, is something
that people can not go without during the winter months. If their is a shortage,
which means that consumers demand more than the available supply, it leads to an
increase in price.
As shown in the graph below, as the supply decreases, the price
increases. This means that the price is inelastic. This is true because as the
price of the commodity is increased, the total amount spent on the commodity
will increase also.
The price mechanism reflects scarcity, which is stated as the gr ....
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SUBJECTS
