Wednesday, May 28, 2008
So the miles driven by Americans in March 2008 dropped by 4.7% (vs. 12 months ago) and everyone is going ga-ga over the fact that people actually responded to the increase in price - a DROP OF 11 BILLION MILES. By my calculation, this shows that as gas went up about 35%, demand went down by less than 5%. Even if you don't take into account the recession (which for some reason is not official), this is a relatively inelastic response. It's pretty hard to see why people are so excited.
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