<p>High fuel prices would have made real beef too expensive. They’re more likely to be working in a movie theatre that’ll be using its optic-fibre network to stream its content from a central server.</p>
<p>fuel will be finished by then, or getting there, so demand would go down, and so will price. Or, due to its rarity, demand would rise, as will price. But either way, a movie theater is sound cool.</p>
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<p>That’s the supposed long-run market correction … </p>
<p>This of course assumes that energy is a perfectly competitive industry and that demand for energy is perfectly elastic, (this allows the long-run economic profit to be zero – which is the reason why the price would go down) and I trust I don’t need to tell you how problematic that assumption is. ;)</p>
<p>When supply decreases and price rises, this increases the demand for substitute goods and raises the MB curve of the supplier – the price will be the same as usual in the long-run if the market conditions don’t change. (Suppose a market with conditions C and equlibrium number of suppliers of 4000 before one supplier quits; 3999 suppliers make for a slightly higher price, brings MB curve for suppliers up but only enough to replace the lost supplier – assuming a perfectly competitive industry and that the market conditions [determinants of demand/supply other than number of suppliers] are the same.) But on top of energy not being a perfectly competitive industry, the market conditions are hardly the same – fuel has run out. The price of the fuel that is left is dependent on its remaining economic utility (i.e. the demand by each firm is dependent on the opportunity cost of production without fuel). </p>
<p>Actually, you’re talking to a guy who didn’t have an AP Economics class offered to him and basically self-studied for the exam. I’m doing this mainly to rehash so I don’t lose what I’ve learnt over the summer. Also, I hope I get a 5 – otherwise I get no credit. :(</p>
<p>There is no way oil demand will go down. It’s a necessary good.</p>
<p>Well at the present moment it’s a good with highly inelastic demand. But it won’t necessarily stay there forever.</p>
<p>You should learn how to skim. It is a great tool to go through business school. You don’t need to read everything people writes, just what interests you. And I’ve found interesting long posts in this forum.</p>
<p>prices will eventually go down, but it’ll be too late because the damage would have been done long before.
As for skimming, it’s easier said than done. Sometimes if I skim, I end up misunderstanding the text I’m supposed to be reading.</p>
<p>Well, some of us actually like to be helpful in our posts, giving more than just a simple “yes” or “no.” ;)</p>
<p>(The really short posts just boost the person’s post count without much effort; honestly, those who write nice, long thoughtful posts are the real men (or women). sakky would clearly win any contest of this.)</p>
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<p>Yup! Increase the number of substitutes, increase the elasticity! Hydrogen anyone?</p>
<p>but nothing beats good old fashioned oil…or face to face conversations for that matter (instead of talking to each other by our key boards.</p>