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1. Heating Commodities
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Beginning of Paper
Heating Commodities

Jennifer Loughery 082970 Introductory to Micro-Economics 1011-107 November 25, 1996. Back in the middle of October, the price of natural-gas had risen because a gas company was forced to shut down a pipeline due to the need for repairs. This impending shortage ....

Middle of Paper
.... rather than the natural-gas, the higher priced commodity. The commodity, energy, is something that people can not go without during the winter months. If their is a shortage, which means that consumers demand more than the available supply, it leads to an increase in price. As shown in the graph below, as the supply decreases, the price increases. This means that the price is inelastic. This is true because as the price of the commodity is increased, the total amount spent on the commodity will increase also. The price mechanism reflects sc ....

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