A new concept for you – Thermal elasticity of demand
“As snow sweeps the country, the UK has coped in the way it usually does – with surprise, confusion and chaos.” Not only have the transport authorities in many areas struggled to cope, but individuals too have been caught out. Many have rushed to stock up on things such as blankets, fires, de-icing equipment and warming foods.
But why does Britain cope worse than many other countries? Should more resources be diverted into keeping roads, airports and rail lines open? And how have individuals responded? How much have they stocked up on a range of cold-weather items and why? The linked article looks at these issues?
Why can’t the UK deal with snow? EU Infrastructure, Timon Singh (6/1/10)
Questions
- Does it make economic sense for the UK to invest relatively little in snowy-weather infrastructure?
- How should a local authority decide whether or not to (a) buy an additional gritting lorry; (b) increase its stock piles of grit? How would risk attitudes affect the decision?
- Why might a lower proportion of people get to work in the recent snowy weather than in equivalent weather 20 years ago?
- How might you define a ‘thermal elasticity of demand’ for a product, where the determinant of demand is the temperature?
- What factors determine the thermal elasticity of demand for a product? How is the short-term elasticity likely to be different from the longer-term elasticity and why?
- What would you need to include in measuring the full social costs to the economy of the cold spell?