Topic 5: Ripple Effects and Elasticity

  The ripple effect is a very simple yet confusing theory. Many people thinks that a little rise in price in oil would not effect them, since they don't currently own any automobiles, but in reality, everything that has to do with oil will have a strong effect. Oil is used in manufacturing life goods, plastic, diapers, crayons, and much more daily things contain doses of oil in them. As oil becomes a necessity in creating these products, the little rise in price of the oil, will simply shoot the prices of the goods up. The products are heavily dependent on the oil because it is one of the main component in the chemical mixture of the product such as plastic. When things like plastic shoots up, the companies requiring to use plastic will not be able to find any substitute, so they will have to use the plastic. Plastics would be considered an elastic product in some ways, certain companies can find ways to find alternatives to plastic, while certain cant.  However, when consumers see things like crayons jump up in price due to oil, they may feel that because it is a luxury, they could pass on the crayons and find alternative cheaper recreational paths.  Crayons, the increase or decrease in price will not let the buyers suddenly stop buying them or buy alot of them at once, the product is therefore inelastic. Things like corn will also create a ripple effect, as we use them for many things, feeding cows, ethanol, or just consuming them. There are certain products that I use in my life that are relatively inelastic, such as more necessities like salt or water. There are things like chocolate bars which are elastic, as I wouldn't pay much more money for it if the prices went up.