Topic 5: Ripple Effects and Elasticity

When the price of the oil increases, there are ripple effects. For example, tires are made from oil, so if the oil’s price increases, the tire is going to increase. People might say that they don’t need to buy new tire. However, when making roads, the ingredients are made up of oil. Therefore, when the price of the oil increases, the government will stop the road projects temporarily. There are many things that are made from oil. At first we might think that increase of the price won’t effect a lot, but it can increase the prices of airline tickets, carpet, crayon, and etc.

The change in oil affects my family, which my family has to change our transportation. Most of the time, my dad drives the car to wherever he wants, but when the price of the oil increases, we try to take the public transportation.

Metal is another goods that has inter-connectedness with others goods and services. A lot of things we see are made up metal such as machines, houses, technologies, and etc. When the price of the metal increases, many things’ prices will also increase.

Elasticity means that no matter what the quantity is, the demand is still the same, but in the case of inelasticity, the change in price will not change the demand. For me, water is an inelastic good, because water is the most important thing in life. Therefore no matter how expensive it is, my demand for water is still the same.