Gasoline is an inelastic product because as the price of gasoline increases, the demand does not decrease significantly as there are very few good substitutes for gasoline. An important aspect of oil demand is the difficulty of substituting other sources of energy for some petroleum products—particularly gasoline. In the immediate term at least, gasoline has virtually no cost-effective substitutes, and, therefore, increases in its price cause only small decreases in consumption. (The Government Accountability…
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