Quote:
Originally Posted by Cube Inmate
So, then, explain to me why we're paying $1.20/L for gas today when the gas vendors proved only a week or two ago that they can charge $1.39/L and people would still buy? Explain why "petrol" costs twice as much in the UK yet people still pay for it?
I don't need explanations...I only felt like saying that you've attempted to over-simplify things and used the classic technique of presenting it as something that "we all learned in Grade 8." It only works if nobody calls you on it, so there you go.
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If your point is that demand for gasoline is inelastic then I would disagree:
http://www.econbrowser.com/archives/...ne_demand.html
As you can see from that chart, higher prices have led to lower consumption has dictated by economic theory.
So yes, there is so slack in demand for gas, and it's exactly what a carbon tax or cap and trade system intends to exploit.