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146:. In economics, demand destruction refers to a permanent or sustained decline in the demand for a certain good in response to persistent high prices or limited supply. Because of persistent high prices, consumers may decide that it is not worth purchasing as much of that good, or seek out alternatives as substitutes.
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The expectation of future prices and their long-term maintenance at non-economic levels for a certain quantity of consumption also affects vehicle decisions. If the price of fuel is so high that marginal consumers cannot afford the same mileage without switching to a more efficient car, then they are
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on automobile sales. It has been widely observed that when gasoline prices are high enough, consumers tend to begin buying smaller and more efficient cars, gradually reducing per-capita demand for gasoline. If the price rise were caused by a temporary lack of supply, and the price then subsequently
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goes back down as supply returns to normal, the quantity of gas consumed in this case does not immediately go back to its previous level, since the smaller cars that had been sold remain in the fleet for some time. Demand thereby has been "destroyed", shifting the demand curve.
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forced to sell the less efficient one. An increase of the quantity of such vehicles causes the used market value to fall, which then increases the depreciation expected of a new vehicle, which increases the total cost of ownership of such vehicles, making them less popular.
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that may be permanently left in the ground. Competition from low priced natural gas, reduced demand for coal due to emission restrictions and uneconomic export situations each play a part. Environmental legislation that prevents
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industry, "demand" generally refers to the quantity consumed (see for example the output of any major industry organization such as the
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production was shut down on various occasions, as gas is the main part of the production cost.
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A familiar illustration of demand destruction is the effect of high
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308:"Supply Chain Comment: The Start of Demand Destruction for Oil?"
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398:"Gas crisis: No chance lights will go out, says government"
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Permanent downward shift on the demand curve of a commodity
335:"Auto Sales Plummet, GM and Ford Meet Demand Destruction"
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in the direction of lower demand of a commodity, such as
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The coal reserves in some regions are regarded as a
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The term came to some prominence in tandem with the
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223:in Europe in 2021-2022, up to 70% of Europe's
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109:Learn how and when to remove this message
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423:O'Donnell, Charles (30 August 2022).
310:. Supply Chain Digest. Archived from
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