Exercise 1 Question 1- Everyone’s Gasoline Problem. We are all familiar with fluctuating prices of gasoline at the pump. Why does this happen? Let’s take a closer look at what it takes to get a gallon of gas into your car. All gas companies follow the same basic formula. Crude Oil + Refining Process + Retail Sales/Distribution + Taxes = Gas Price The problem with this formula is not all of these components contribute equally. So let’s take a look at each of these components and what economic impacts have on that mentioned gallon of gas .Crude oil is 69% of the cost and those cost exist of finding it, getting it out of the ground, and transporting it to the refinery. Refining the crude oil cost another 6%. Selling the gasoline is 10% …show more content…
So when demand increases and a supply doesn’t change, a shift in price will happen. This shift will move to the right causing a new Equilibrium. Demand refers to the quantity of products people are willing and able to purchase during some specific time period, all other relevant factors being held constant. Price and quantity demanded stand in a negative (inverse) relationship: as price rises, consumers buy fewer units; and as price falls, consumers buy more units (Stone 75). When a company experiences a new equilibrium price causing a higher demand with this higher demand the coffee population will have the opportunity to pay higher wages and invest in more coffee R&D and processing technology and create a better infrastructure for the Starbucks corporation. If this demand does exist it would allow other companies to enter the market giving star bucks more competition. Once all the smoke settles with this new product the demand will begin to slow down because of increased supply, competition and more growers will produce more of the needed coffee beans needed to product this new coffee type. Starbucks is constantly doing this with its new products. Originally they were the new kids on the block with the newest premium coffee, but due to this trending copy cats have entered the market, and once the consumer realized that prices went up. They to begin to find alternatives to drinking premium coffee. Several of these substitutes
Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left.
Economically, the demand and supply of a product describes how cost or price, vary between availability and demand. Hence, for a given commodity, demand is the relation of the quantity of goods and services that consumers would be prepared to purchase at each unity price.
-The role and significance of prices in the market economy has to do with supply and demand. If there are the same amount of buyers as products, the price will settle. If there are more buyers than products, the price of the product will rise. And, if there are more products than buyers, the price of the product will decrease. This occurs until the supply of the product matches the demand of the product.
If gas prices were fixed, many dilemmas would occur that are out of our control. Today's price of gas fluctuates to meet the equilibrium so that surpluses and shortages do not
Answer the next question on the basis of the following production possibilities tables for countries Alpha and Beta:
To understand the increase in gas prices, one must first identify the distribution of dollars paid per gallon at the pump. According to the U.S. Energy Information Administration (eia) in 2010, the annual average paid at the pump consisted of 68% crude oil, 7% refining, 10% distribution and marketing, and 15% taxes
Edgar, my cousin, is always thinking of the next business idea. His next business idea includes buying to gas stations. He believes that both gas stations would be profitable and allow revenue for him to increase. After recently reading an article named “$4-a-Gallon Gas Fueling Fears for Recovery” I decide to research the market in terms of supply and demand, elasticity, costs of production, pricing, and normal or economic profit or loss. In order to help my cousin Edgar I would like to provide him with the most informed advice possible.
The chart above shows a graphic comparison regarding the different gas prices at the two different Marathon locations. This graph shows a visual trend of each of the various gasoline prices. According to the data recorded, the gasoline prices at the Angola Marathon throughout the week were, on average, about fourteen cents more per gallon than at the Muncie Marathon. The prices of gasoline at the Muncie Marathon declined, on average, about four cents per gallon per day throughout the week. While the gas prices at the Muncie Marathon continuously decreased each day, the gas prices at the Angola Marathon varied each day. Within the first three days, the gas prices at the Angola Marathon decreased about two and a half cents each day, on average. On the last day data was recorded, the trend at the Angola Marathon was reversed, and the price of gas increased by one cent.
The gas and oil prices impact all the sectors of the economy; including transportation and
Drivers realize that the price of gas is tied to the market value of crude oil, and has a direct impact to their daily commutes, errands, and vacations. However the reality is that the price of fuel has implications much grater than most consumers realize. Fuel prices affect nearly everything we purchase. For example, the price of farm commodities and food increase because farmers pay more for the fuel for their farm equipment and trucking firms pay more for fuel to get the commodities to market. These shipping “fuel surcharges” impact all goods
In 2009, the world experienced a Global Financial Crisis (GFC) which caused recession in most advanced nations around the world. In an effort to combat this, the Australian Government created a Stimulus Package to increase aggregate demand. The treasurer, Wayne Swan proposed that $42 billion would be given to both individuals and businesses to lessen the impact of a recession. The package included a one off $950 payment to low and middle-income families, individuals, famers, students and other groups. The Stimulus Package was also aimed at the construction of new buildings and upgrades, as well as roadworks. The Government also intended to give 9,540 schools around the country, a grant to build a new hall or canteen.
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much of a product or service is desired by product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and how much of a good or service is supplied to
Demand It refers to the willingness and ability of buyers to purchase goods and services at different prices.
Part 2 – Additional Problems: Attach any extra pages or printouts to this cover sheet.
To an economists demand refers to both the willingness and ability to pay for a good. When the price of a good falls, the quantity demanded will fall. This applies to both individuals and whole market demand. This is known as the law of demand. The relationship between Quantity Demanded (Qd) and price can be shown in a table (curve). Price is located on the vertical axis and demand is located on the horizontal. The demand curve will have a negative