Comments on: A cross-price elasticity example – gasoline and, eh hem… obesity http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/ for students and teachers of AP and IB Economics Wed, 17 Mar 2010 22:34:06 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Patrick S http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-8934 Patrick S Sat, 07 Nov 2009 07:54:50 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-8934 I never actually thought that there was a possibility ti have this relationship. But, as it is state above, it is actually true. It is really interesting to know that if 1$ is added to the gasoline price, will reduce obesity by 15%. It may be so, due to the fact that these obese pople would have to walk more, or bike, or anything including a kind of movement, intead of driving everywhere. The avereage cost of gasoline in USA is around 2.5$ a gallon, including tax. So if you add 1$ to the average, the new cost will be 3.5$. With this, a increase of 40% is added to the price of gasoline. And, due to the fact that the XED formula is, dividing the percentage change in the quantity demanded of a good A, by the percentage change in the price good B. So, if you divide 15%/40% = 0.375. This number means that this XED is inelastic, and that the goods are supposed to be substitutes. Which means, there is a relationship among these to aspects. I never actually thought that there was a possibility ti have this relationship. But, as it is state above, it is actually true. It is really interesting to know that if 1$ is added to the gasoline price, will reduce obesity by 15%. It may be so, due to the fact that these obese pople would have to walk more, or bike, or anything including a kind of movement, intead of driving everywhere.
The avereage cost of gasoline in USA is around 2.5$ a gallon, including tax. So if you add 1$ to the average, the new cost will be 3.5$. With this, a increase of 40% is added to the price of gasoline. And, due to the fact that the XED formula is, dividing the percentage change in the quantity demanded of a good A, by the percentage change in the price good B. So, if you divide 15%/40% = 0.375. This number means that this XED is inelastic, and that the goods are supposed to be substitutes. Which means, there is a relationship among these to aspects.

]]> By: Ziv Reichert http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-8924 Ziv Reichert Thu, 05 Nov 2009 23:22:18 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-8924 Using the Cross Elasticity of Demand equation, while applying the figures mentioned above, you can see that as the price of fuel increases by $1, the obesity rates would decrease by 15%. This is quite an intriguing observation, as it shows us how much obesity would decrease by. Looking at the results, we can assume that less people will drive cars (due to the higher prices of fuel) and thus end up exercising more (walking, riding the bike, etc.). However, if we were to look at time as a determinant (keeping in mind that fuel prices are going up), we can predict that eventually some people might buy Hybrids, or something similar. So while an increase in fuel price reduces 15% obesity rates (short-run), in the long-run more people will probably find alternatives to walking (hybrids, battery-chairs *sigh*) and thus the 15% decrease of obesity rates would probably begin to get smaller. This is because people will not be able to afford to buy hybrids (etc.) straight away and be forced to walk or take public transportation, but in the long-run, as their net-worth will increase they will be able to purchase these products. Using the Cross Elasticity of Demand equation, while applying the figures mentioned above, you can see that as the price of fuel increases by $1, the obesity rates would decrease by 15%. This is quite an intriguing observation, as it shows us how much obesity would decrease by. Looking at the results, we can assume that less people will drive cars (due to the higher prices of fuel) and thus end up exercising more (walking, riding the bike, etc.). However, if we were to look at time as a determinant (keeping in mind that fuel prices are going up), we can predict that eventually some people might buy Hybrids, or something similar. So while an increase in fuel price reduces 15% obesity rates (short-run), in the long-run more people will probably find alternatives to walking (hybrids, battery-chairs *sigh*) and thus the 15% decrease of obesity rates would probably begin to get smaller. This is because people will not be able to afford to buy hybrids (etc.) straight away and be forced to walk or take public transportation, but in the long-run, as their net-worth will increase they will be able to purchase these products.

]]> By: Nicolo' Fanelli http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-8875 Nicolo' Fanelli Sun, 01 Nov 2009 16:42:41 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-8875 Cross elasticity of demand can be calculated by dividing the percentage change in the quantity demanded of a product divided by the percentage change in the price of another product. Even though obesity is not a 'quantity demanded' one can place the -15% on the top of the fraction and for the bottom, another problem arises, as one cannot calculate the percentage change in price of gasoline not having the original price. From this point on, the situation can be looked at in two different ways. Because gasoline has very few substitutes at the moment and because for many of us it has become a necessity, not many people would stop buying it, and thus not so many people will become less obese and thus the relationship proposed in the article would not apply. However, if we were considering some households where gasoline makes a proportionally big part of their income [many households currently], then they certainly would start buying less of it, and maybe increase exercise or use public transportation. Moreover, over a longer time period, we will see less people using gasoline due to the increased prices, as with more time elasticity of demand will become more elastic. Therefore, this seemingly correct relationship has to be further detailed in order to see whether it is correct or not. Cross elasticity of demand can be calculated by dividing the percentage change in the quantity demanded of a product divided by the percentage change in the price of another product. Even though obesity is not a ‘quantity demanded’ one can place the -15% on the top of the fraction and for the bottom, another problem arises, as one cannot calculate the percentage change in price of gasoline not having the original price. From this point on, the situation can be looked at in two different ways. Because gasoline has very few substitutes at the moment and because for many of us it has become a necessity, not many people would stop buying it, and thus not so many people will become less obese and thus the relationship proposed in the article would not apply. However, if we were considering some households where gasoline makes a proportionally big part of their income [many households currently], then they certainly would start buying less of it, and maybe increase exercise or use public transportation. Moreover, over a longer time period, we will see less people using gasoline due to the increased prices, as with more time elasticity of demand will become more elastic. Therefore, this seemingly correct relationship has to be further detailed in order to see whether it is correct or not.

]]> By: Claire Moon http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2893 Claire Moon Thu, 27 Sep 2007 00:59:16 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2893 Wow, relationship between gasoline price and obesity is really interesting. Since exercise increases, and people would prefer to take other transportation, this could make sense. However, I came out with other factors that are possible. Maybe the price of gasoline and obesity are directly porportional just because the time when gas price goes up, it is when foods and other goods price goes up together. Therefore, the people would less go to the restaurant and have dinner. It is just what I thought =) Wow, relationship between gasoline price and obesity is really interesting. Since exercise increases, and people would prefer to take other transportation, this could make sense. However, I came out with other factors that are possible. Maybe the price of gasoline and obesity are directly porportional just because the time when gas price goes up, it is when foods and other goods price goes up together. Therefore, the people would less go to the restaurant and have dinner. It is just what I thought =)

]]> By: Kathie Lee http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2883 Kathie Lee Wed, 26 Sep 2007 14:18:28 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2883 Very cool. It's like a 2-1 deal. Not only are you richer, but you are also thinner. Even so, I believe that the cause and effect between gasoline and obesity isn't significant But anyway, a rational solution to this issue may be to raise the prices of gasoline therefore drivers will give second thoughts when it comes to driving just a few blocks away. Ta-da!!! It may not sound like you are saving very much, but every little bit counts right? Very cool. It’s like a 2-1 deal. Not only are you richer, but you are also thinner. Even so, I believe that the cause and effect between gasoline and obesity isn’t significant
But anyway, a rational solution to this issue may be to raise the prices of gasoline therefore drivers will give second thoughts when it comes to driving just a few blocks away. Ta-da!!! It may not sound like you are saving very much, but every little bit counts right?

]]> By: Trevor Sun http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2845 Trevor Sun Tue, 25 Sep 2007 11:59:27 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2845 I can see how the increase in gas prices can cause such a change in the number of obese people, but I agree with Andy in that there is a whole list of things that could effect obesity. It makes it hard to tell where it is really due to the increase in gas prices. If it does have such a strong impact on the percent of obese people, I the percent lower now because when I go back to North America the gas prices have significantly increase. Yet on the surface everything looks the same as it was before the increase in price but I haven't seen any recent studies on the number of obese people in North America in a while. I can see how the increase in gas prices can cause such a change in the number of obese people, but I agree with Andy in that there is a whole list of things that could effect obesity. It makes it hard to tell where it is really due to the increase in gas prices. If it does have such a strong impact on the percent of obese people, I the percent lower now because when I go back to North America the gas prices have significantly increase. Yet on the surface everything looks the same as it was before the increase in price but I haven’t seen any recent studies on the number of obese people in North America in a while.

]]> By: Jessica Chiang http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2817 Jessica Chiang Sun, 23 Sep 2007 12:39:08 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2817 I love how so many articles on the wiki are such interesting topics that are obvious but I never thought of them before =]. Hmm...I'm not sure how to calculate the cross-price elasticity of this either. The article says that as the price of gasoline rises, obesity decreases; i guess this makes sense, as people would walk to the supermarket instead of drive. However, can't the increase in price of gasoline also lead to obesity? Perhaps instead of walking to the supermarket, really lazy people, like myself, will just not leave the house. Another way would be to stop by the supermarket on their way to work. And what if they just choose to take public transportation instead? That wouldn't lead to a decrease in obesity...unless the bus stop was really far from their house or something. But I guess the price of bus tickets would also increase if the price of gasoline increased, right? I love how so many articles on the wiki are such interesting topics that are obvious but I never thought of them before =]. Hmm…I’m not sure how to calculate the cross-price elasticity of this either. The article says that as the price of gasoline rises, obesity decreases; i guess this makes sense, as people would walk to the supermarket instead of drive. However, can’t the increase in price of gasoline also lead to obesity? Perhaps instead of walking to the supermarket, really lazy people, like myself, will just not leave the house. Another way would be to stop by the supermarket on their way to work. And what if they just choose to take public transportation instead? That wouldn’t lead to a decrease in obesity…unless the bus stop was really far from their house or something. But I guess the price of bus tickets would also increase if the price of gasoline increased, right?

]]> By: andyxu http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2808 andyxu Sun, 23 Sep 2007 04:24:11 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2808 I do not think that the causation between gasoline prices and obesity exists. Just because two variables are positively correlated does not conclude to a direct explanation of obesity. There are simple too many other explanations for a decrease in obesity: health concerns, decrease consumption of junk foods, exercise promoted through new available facilities. Gas price increase has little significance on obesity. I do not think that the causation between gasoline prices and obesity exists. Just because two variables are positively correlated does not conclude to a direct explanation of obesity. There are simple too many other explanations for a decrease in obesity: health concerns, decrease consumption of junk foods, exercise promoted through new available facilities. Gas price increase has little significance on obesity.

]]> By: Jeewon Oh http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2795 Jeewon Oh Sat, 22 Sep 2007 15:03:54 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2795 It seems ridiculous that there is a relationship between the gasoline price and obesity, but it actually make sense. It is logical that people will choose to walk instead of taking a car when the gasoline price rises. However, as Chan said, time is an important factor, since a $1 increase in gasoline price does not mean that everyone would start walking and become skinny. If the gasoline price keeps on rising, then the people would decide not to use or buy cars. Since gasoline and cars are complementary goods, the price increase of gasoline would eventually decrease the demand for cars, which would then reduce obesity. It seems ridiculous that there is a relationship between the gasoline price and obesity, but it actually make sense. It is logical that people will choose to walk instead of taking a car when the gasoline price rises. However, as Chan said, time is an important factor, since a $1 increase in gasoline price does not mean that everyone would start walking and become skinny. If the gasoline price keeps on rising, then the people would decide not to use or buy cars. Since gasoline and cars are complementary goods, the price increase of gasoline would eventually decrease the demand for cars, which would then reduce obesity.

]]> By: Jenny Kim http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2773 Jenny Kim Thu, 20 Sep 2007 16:39:36 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2773 First of all, those statistics surprised me. 1$ increase in gasoline reduces 15% of obesity rates? Surprising. But then I guess this actually makes sense. Just like the activity we did in class in individual groups with the smart board, when gasoline prices go up, in the short-run people will still use gasoline and individual transportation. BUt in the long-run, lets say about 4 or 5 months later, people might use more public transportation or they might walk to work or ride bicycles to work, which would increase the amount of exercise people get and eventually reduce the chance of being obese. First of all, those statistics surprised me. 1$ increase in gasoline reduces 15% of obesity rates? Surprising. But then I guess this actually makes sense. Just like the activity we did in class in individual groups with the smart board, when gasoline prices go up, in the short-run people will still use gasoline and individual transportation. BUt in the long-run, lets say about 4 or 5 months later, people might use more public transportation or they might walk to work or ride bicycles to work, which would increase the amount of exercise people get and eventually reduce the chance of being obese.

]]> By: Judy Chen http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2750 Judy Chen Wed, 19 Sep 2007 12:52:43 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2750 It is really weird that there is actually a connection between the price of gasoline and obesity. But, i think it is quite plausible, because, once the price of gasoline goes up, people might take another transportation or walk instead of driving their own cars. So, they can save money and exercise. Then, there's a decrease in obesity as exercise helps us being fit. Well, it is a both weird AND interesting research and maybe it does make sense on some people. It is really weird that there is actually a connection between the price of gasoline and obesity. But, i think it is quite plausible, because, once the price of gasoline goes up, people might take another transportation or walk instead of driving their own cars. So, they can save money and exercise. Then, there’s a decrease in obesity as exercise helps us being fit. Well, it is a both weird AND interesting research and maybe it does make sense on some people.

]]> By: Michael Chow http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2749 Michael Chow Wed, 19 Sep 2007 12:52:35 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2749 The cross elasticity between gasoline prices and obesity. When I read this title under the "Recent Posts" on the left hand side of the page I was immediately drawn in by this statement. Now after giving it some thought, this is how I modelled it out. The increase price of gasoline -> less transportation -> different methods of transportation (Ex. walking, jogging etc.) The whole idea seems pretty simple as the price increases for gasoline the average person is eventually going to be forced to seek different means of transportation. Since it is a necessity one method as a result is more walking from place to place. With the increase of gasoline of $1, the obesity rates went down 15%, making gasoline elastic. Like Chan mentions time is an extremely significant factor to keep in mind because as time goes by gas prices are only going to rise thus leading to other means of transportation. The cross elasticity between gasoline prices and obesity. When I read this title under the “Recent Posts” on the left hand side of the page I was immediately drawn in by this statement. Now after giving it some thought, this is how I modelled it out. The increase price of gasoline -> less transportation -> different methods of transportation (Ex. walking, jogging etc.) The whole idea seems pretty simple as the price increases for gasoline the average person is eventually going to be forced to seek different means of transportation. Since it is a necessity one method as a result is more walking from place to place.

With the increase of gasoline of $1, the obesity rates went down 15%, making gasoline elastic. Like Chan mentions time is an extremely significant factor to keep in mind because as time goes by gas prices are only going to rise thus leading to other means of transportation.

]]> By: Chan Min Park http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2744 Chan Min Park Wed, 19 Sep 2007 11:05:46 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2744 The connection between gasoline price and obesity is a pretty weird one, but actually makes sense in some ways. I think everybody mentioned it already, that the relationship between gasoline prices and obesity could be fairly logical. As gasoline prices rise, people will choose to take other methods of transportation and thus this could reduce obesity. Thus i guess the price of gasoline is elastic, because a 1% increase causes a 13% decrease in obesity. However time is also a factor here. Just because gasoline prices rise like 1$ doesn't mean people are going to start getting skinner. Over time, after the cars get old, then people might choose not to buy cars since gasoline prices have grown, and thus start to walk or ride a bike. This could cause a decrease in obesity The connection between gasoline price and obesity is a pretty weird one, but actually makes sense in some ways. I think everybody mentioned it already, that the relationship between gasoline prices and obesity could be fairly logical. As gasoline prices rise, people will choose to take other methods of transportation and thus this could reduce obesity. Thus i guess the price of gasoline is elastic, because a 1% increase causes a 13% decrease in obesity. However time is also a factor here. Just because gasoline prices rise like 1$ doesn’t mean people are going to start getting skinner. Over time, after the cars get old, then people might choose not to buy cars since gasoline prices have grown, and thus start to walk or ride a bike. This could cause a decrease in obesity

]]> By: serenatu http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2728 serenatu Tue, 18 Sep 2007 15:35:26 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2728 I never thought of the relationship between gasoline and obesity before, but I think it's quite interesting to make this connection between the two. It's somehow true that the number of obesity people could reduce when the price of the gasoline is high, because then less people will be willing to pay for the high gas price, so they will choose to walk or bike. And vice versa. I like the idea presented in this article. =) I never thought of the relationship between gasoline and obesity before, but I think it’s quite interesting to make this connection between the two. It’s somehow true that the
number of obesity people could reduce when the price of the gasoline is high, because then less people will be willing to pay for the high gas price, so they will choose to walk or bike. And vice versa. I like the idea presented in this article. =)

]]> By: Mond http://welkerswikinomics.com/blog/2009/10/30/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/comment-page-1/#comment-2719 Mond Mon, 17 Sep 2007 12:05:59 +0000 http://welkerswikinomics.com/blog/2007/09/13/a-cross-price-elasticity-example-gasoline-and-eh-hem-obesity/#comment-2719 Can one dollar cause such a dramatically effect on a person’s body? I am going to look at the problem in a different approach. To be considered obese, a man must have a BMI of 30 or greater or a body fat percentage of 25% or greater. The average American male according to sources is 185pounds at six feet with around 15% body fat. Using the BMI calculator the person must weigh approximately 222 pounds to be considered obese. That is 37pounds of fat tops, which is 129,500 calories, which rounds up to be 70calories a day over the course of 5 years. Which could be plausible but I highly doubt one dollar can cause this difference, because there are literally millions of other factors that could cause the results of the experiment to be altered. Furthermore, gasoline is a highly inelastic product; it is somewhat a necessity in people’s daily lives. If a person can afford a car, logically saying, he or she should also be able to afford the gasoline for the car too. Can one dollar cause such a dramatically effect on a person’s body? I am going to look at the problem in a different approach. To be considered obese, a man must have a BMI of 30 or greater or a body fat percentage of 25% or greater. The average American male according to sources is 185pounds at six feet with around 15% body fat. Using the BMI calculator the person must weigh approximately 222 pounds to be considered obese. That is 37pounds of fat tops, which is 129,500 calories, which rounds up to be 70calories a day over the course of 5 years. Which could be plausible but I highly doubt one dollar can cause this difference, because there are literally millions of other factors that could cause the results of the experiment to be altered. Furthermore, gasoline is a highly inelastic product; it is somewhat a necessity in people’s daily lives. If a person can afford a car, logically saying, he or she should also be able to afford the gasoline for the car too.

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