discuss the impact of the rise and fall of gasoline prices a

discuss the impact of the rise and fall of gasoline prices and the lifestyle changes those fluctualtions create

Solution

Higher (lower) gasoline prices increase (decrease) the cost of operating automobiles. So, usage of automobiles decreases (increases) and usage of public transportation and car pooling services increases (decreases).

However, if the demand for gasoline is highly inelastic, higher price will not change quantity demanded by a large amount, therefore not much change in usage is observed. The usage pattern depends on elasticity of demand for gasoline.