Explain the elasticities of demand in the news clip

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Question: As Gasoline Prices Soar, Drivers Slowly Adapt As gas prices rose in March 2008, people drove shorter distances than in March 2007. Realizing that prices were not going down, drivers adapted to higher energy costs. We spend 3.7 percent of disposable income on transportation fuels. How much we spend on gasoline depends on the choices we make: what car we drive, where we live, how much time we spend driving, and where we choose to go. For many people, higher energy costs mean fewer restaurant meals, deferred weekend outings with the kids, less air travel, and more time closer to home.

a. List and explain the elasticities of demand that are implicitly referred to in the news clip.

b. Why, according to the news clip, is the demand for gasoline inelastic?

Reference no: EM131611772

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