[Old_Mil]

Market forces allocate scarcities and higher prices, which indicate demand outstripping supply, reduce consumption and bring those forces back into balance.

Price elasticity of demand is measured as the percentage change in quantity demanded that occurs in response to a percentage change in price. For example, if, in response to a 10% fall in the price of a good, the quantity demanded increases by 20%, the price elasticity of demand would be 20%/(− 10%) = −2. (Case & Fair, 1999: 109).

In general, a fall in the price of a good is expected to increase the quantity demanded, so the price elasticity of demand is negative as above. Note that in economics literature the minus sign is often omitted and the elasticity is given as an absolute value. (Case & Fair, 1999: 110). Because both the denominator and numerator of the fraction are percent changes, price elasticities of demand are dimensionless numbers and can be compared even if the original calculations were performed using different currencies or goods.

An example of a good with a highly inelastic demand curve is salt: people need salt, so for even relatively large changes in the price of salt, the amount demanded will not be significantly altered.

Similarly, a product with a highly elastic demand curve is red cars: if the price of red cars went up even a small amount, demand is likely to go down since substitutes are readily available for purchase (cars of other colors).

As people cannot easily move from one residence to another, move from one job to another, or easily change vehicles oil has an inelastic demand curve.

[ClaireSolt]

" As people cannot easily move from one residence to another, move from one job to another, or easily change vehicles oil has an inelastic demand curve."

However, each person is different. So when some respond by moving, changing cars, or modifying driving it will decrease the deamnd and hence the price. Those most impacted are the most likely to make changes.