Topic 5: Ripple Effects and Elasticity

Ripple Effect is when a single event influences all other stuffs around it and creates patterns that are difficult to predict. The rise in the price of oil can raise prices almost every item in the store and automobiles. The cost of transporting goods and cost of producing goods become more expensive than before, because of the rise in price of oil, so the price of the goods also rises. It affect my family deeply, because not only the price of goods rise, but driving automobiles also become more expensive. Corn is a good example of ripple effect. Corn can be either food or bio-fuel. If we make more bio-fuel, the price of corn will rise. People will have to buy less of the goods. The idea of elasticity affect the markets very much. When an object is elastic, a little price change can shift the entire quantity demand. When a good is inelastic, a big shift in price still won't change the price of the good. Foods and water are relatively inelastic to me, because no matter what the price of the food and water is. I will still have to buy it. Toys and games are relatively elastic, because when the price of the games rises even 50 dollars. I will not buy it.