Effect Of The Law Of Supply And Demand

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The effect of the law of supply and demand is clearly demonstrated in the news article titled “Gas prices go below $3” (Isidore, 2014) which is closely related to the article “Oil prices are plunging. Don 't cheer yet” (Egan, 2014). We begin by analysing the supply of gasoline, which has been increased by several supply shifters. One of the factors is the increase in capacity of existing oil refineries, which produce petroleum (EIA, 2013). Another aspect is the improvements of refining technologies that allow more gasoline to be yielded out of the same amount of crude oil (GAO, 2005). Nevertheless, one of the most crucial supply shifters is the price of input which is, in this case, the price of crude oil that has recently fallen “below…show more content…
Overall, we can see that the following changes in both supply and demand curves have affected the price of crude oil, because if the oil producers were to sell oil at the same price as before, then by the law of supply and demand, there would have been a surplus of crude oil. Therefore, the prices fall to equate quantity supplied with quantity demanded. Coming back to the prices of petroleum, we can see that, given that the demand for gasoline has remained the same and the supply has increased, by the law of supply and demand in order to meet the market equilibrium the prices should fall and the quantity should increase. This is true, as we can see from the news item. Entry Barriers The existence of entry barriers into a market can be seen in the articles titled "Why Retailers Will Love the Apple Pay Era” (Stock, 2014) and “Apple Pay Is Too Anonymous for Some Retailers” (Brustein, 2014). With the release of the iPhone 6 and iWatch, Apple has introduced a new feature on both of them: “the ability to not only make payments with your mobile device (as opposed to a credit or debit card), but to make payments that are supposedly more secure than traditional American credit card purchases” (Abel, 2014). Thus, with the release of Apple Pay, the American corporation (Apple) has entered the market of cashless transactions and
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