Unit 2 → Subtopic 2.4
Gasoline vs. Public Transport: Comparing Elasticity
Transportation is a daily necessity, but the way people choose to travel depends on several economic factors, particularly the price elasticity of demand. While gasoline is essential for car owners, public transportation provides an alternative that might become more attractive when fuel prices rise. This project challenges students to compare the price elasticity of demand for gasoline and public transport, analyzing which one is more sensitive to price changes.
Students will research how consumers react to price changes in gasoline and public transport fares. They should examine whether an increase in gasoline prices significantly reduces driving habits or if consumers continue purchasing gas regardless of the cost. In contrast, they should investigate whether a fare hike in buses, trains, or subways leads to major shifts in ridership. By applying price elasticity theory, students will determine which service is more elastic and why.
An important factor to consider is the availability of substitutes. If gasoline prices rise sharply, do consumers switch to public transport, biking, or carpooling? On the other hand, if bus or subway fares increase, do riders find alternatives, or are they dependent on these services? Students should also analyze income effects, as wealthier individuals may absorb price increases more easily, while lower-income commuters may be forced to adjust their transportation choices.
The final output will be an engaging in-class presentation that explains price elasticity concepts using real-world data, graphs, and case studies. Students will illustrate how different consumer groups react to changes in transportation costs and discuss the broader economic implications. The goal is to help students understand how elasticity impacts transportation pricing policies and consumer behavior in urban and suburban economies.
Recommended Procedure:
Research Price Elasticity of Gasoline and Public Transport – Gather data on how demand for both services responds to price changes in different economic conditions.
Compare the Role of Substitutes – Analyze how the availability of alternative transportation options influences elasticity. Determine whether rising gas prices push consumers toward public transport.
Examine the Impact of Income Levels on Demand – Consider how price sensitivity differs between income groups. Identify whether lower-income commuters are more affected by transportation fare increases.
Use Graphs and Case Studies to Illustrate Findings – Create visual aids showing demand curves for gasoline and public transport, highlighting differences in elasticity.
Present and Discuss Findings in Class – Deliver a structured presentation explaining elasticity differences and engage classmates in a discussion about how price changes affect transportation choices.
Suggested Sources:
Understanding Price Elasticity of Demand:
Investopedia: Elastic vs. Inelastic Demand – https://www.investopedia.com
Khan Academy: Factors Affecting Price Elasticity – https://www.khanacademy.org
2. Case Studies on Gasoline and Public Transport Demand:
World Bank: The Price Sensitivity of Fuel Demand – https://www.worldbank.org
Harvard Business Review: How Public Transit Responds to Fare Changes – https://hbr.org
3. Market Data on Transportation Costs:
U.S. Energy Information Administration: Gasoline Price Trends – https://www.eia.gov
Urban Institute: The Economics of Public Transportation – https://www.urban.org
4. Data Visualization and Presentation Tools:
Google Slides or PowerPoint for creating an engaging presentation
Desmos or Excel for graphing demand curves
Grading Rubric:
Total Points: __ /20
