ipl-logo

How Do Gasoline Prices Affect Supply And Demand?

497 Words2 Pages

Supply and demand of a typical good or service can be affected or shifted by all sorts of scenarios. The shifting of the demand curve are affected by certain situations such as changes in prices of related goods and services, income, number of buyers, changes in tastes, and changes in expectations (Sexton, 2012). Any of these changes are sort of like a domino effect, if one product is needed then another product related to it will either increase or decrease in price. This is all subject to change based on price and need of the product. The increase in demand for one product may lead to the demand of another that is needed for that initial demand. This reaction causes a curve shift to the right as it continues to increase, causing those two …show more content…

Gasoline is a necessity for all individuals who drive a vehicle. Gasoline prices have increased drastically and are always fluctuating up and down depending on the price for oil at that given time. Consumers tend to respond to these prices, when the price is increased drastically, some of those consumers will try and wait until the prices decrease (Bryne, Leslei, & Ware, 2015). When those prices finally do decease, some consumers may even stock up on a larger quantity for their household. In this particular situation when the gasoline price decrease, gas stations will be able to have more in supply for consumers. This would be considered a curve shift to the right. The lower price in gasoline is considered the shifter that was affected. When the gasoline prices decrease, there is a great demand from consumers which essentially brings the equilibrium price and equilibrium quantity to intersect. When consumers are willing to buy that gasoline at that given price by the supplier, this would be considered the equilibrium price as well as the equilibrium quantity of the

Show More
Related
583 Words | 3 Pages

The global demand for gas has increased and so have the gas prices increased at the pump. Gas is important for everyday life and the cost should NOT be increasing. Big business would argue that gas prices are not the sign of a declining or struggling economy. They say that the fluctuation is natural and necessary to keep trade ongoing and competitive.

Read More
472 Words | 2 Pages

An increase in government purchases Shifts the AD curves to the right causing an increase in real income and the price level in the short-run. b. A reduction in nominal wages Shifts the SAS curve downward, causing an increase in real income and a lower price level. c. A major improvement in technology

Read More
558 Words | 3 Pages

Because the sell cost is low, many oil producers are not equipped to operate and compete in a crude environment below forty dollars per barrel. Meanwhile, the buyers are also having to pay more because of the new regulation and high

Read More
629 Words | 3 Pages

This directly impacts the supply curve because the price would increase and the quantity would decrease, and the supply curve would shift to the left. Thus, the supply curve shifts and the determinant that is causing this shift is the factor of input. The factor of input is the determinate because the new low price of IPhone batteries at the cost of twenty-nine dollars is increasing demand, there is more want for the batteries, seventy percent of people choose battery over upgrading their IPhone (Jones, Chuck, “A $29 Battery Could Cost Apple Over $10 Billion”). This low cost of IPhone batteries is harmful to Apple’s revenue, as they can lose billions of dollars because of how much the demand is for the batteries

Read More
718 Words | 3 Pages

With the reduce of fuel cost, customers will ask

Read More
456 Words | 2 Pages

If the government sets the price too high, many people would not have enough money to get to the places they need to go to such as school, work, and medical places. On top of that, many gas stations would go out of business because the demand for gas would be low so they are losing profit. However, if a lower set price issued then the demand for gas would increase causing long lines and a major shortage of gas. Gas stations would have to give out less amounts of gas and set limits of how much gas that people can get so it can be fair for everyone.

Read More
1481 Words | 6 Pages

The law of supply results comes from the marginal cost of producing a item or service to increase the amount that is produced which is helped to increase the profit. Producers are willing to supply any items if they can at least cover their opportunity cost of production. The graph below shows an example of how a supply demand curve should look. Market equilibrium Market equilibrium is when other companies forces balance with each other.

Read More
739 Words | 3 Pages

Unless demand changes, just because they're paying less [for fuel], they're not going to pass those savings on unless they have to" (Carlson,

Read More
791 Words | 4 Pages

The rise was so dramatic, the trucking industry could not afford to absorb the costs and created the fuel surcharge to offset the price at the pump. While this aided in lowering the price paid by the trucker, this cost was passed on to the consumer. The price of fuel caused the industry to become very concerned, though preservation of the environment was not the priority. In the market, the economy is the last thought, but due to the economy, actions taken by the industry have led to decreases in the amount of fuel being consumed by the trucking industry. (Fuel Surcharge Index 2016)

Read More
819 Words | 4 Pages

Now gas is like a competition, you have to find the best prices before anyone else does. You do not want to wait for one open gas pump, which will take about ten minutes considering the people who clean their cars while waiting to fill up their tank. Not only do they clean their cars while getting gas, but they buy things they want from the store which takes about five minutes and they always take their time. Gas prices can vary during certain times periods. Many things can cause gas prices to skyrocket, such as supply and demand for crude oil, so if the gas is $3.89 it can become $4.76 which is ridiculous.

Read More
613 Words | 3 Pages

Have you ever been to the gas station and thought to yourself "why are these gas prices so high"? You may have even thought about cutting back some of your driving. When gas goes up it seems like the whole world may have turned their backs on you. In fact, Americans have an unquenchable thirst for gasoline. You could look at the amount of traffic on roads and highways, and you'll see that if a severe gas shortage were to happen it would cripple the United States into shambles.

Read More
712 Words | 3 Pages

For three plus days, it was a concern of both consumers and producers when the supply and demand would intersect again. However, in other cases when gas prices are up in price for a period of time, consumers demand goes down. Some consumers will travel less, and some may even trade in there high in vehicles for smaller or energy efficient vehicles. Gasoline is the primary fuel for mostly all automobiles, and has become a necessity for all American people who drive, and need to get places, so there is always the constant need for gas that makes the demand so high. “While increased demand has some potential effect on the price of gas, the price will help equal out supply of gas with demand,

Read More
565 Words | 3 Pages

Prices go up when we want to drive the most, as for summer vacation. After Labor Day, prices decline, a situation which we 're currently (almost) appreciating. It could well be that the oil companies are beginning to realize the party 's over. The economy is just too tight. Last quarter, even though gas prices were declining, public consumption continued to decline.

Read More
1041 Words | 5 Pages

DEMAND CURVE Demand is defined as the different quantities people are willing to buy at different prices. As the price of good increases the demand decreases and vice versa. The law of demand states shows an inverse relationship between price and quantity demanded. The demand curve shows the relationship between the quantity of a good a consumer is willing to buy and the price of the good. The equation for that shows the relationship between the quantity demanded and price is as given below: QD =

Read More
1870 Words | 8 Pages

This is also where price mechanism takes place because any changes in demand and supply, will affect the price, and eventually balancing the demand to be equal to supply. This is the reason why consumers and producers have no control over the price, and in this situation, everyone is considered as price takers. This causes a horizontal line in the demand curve for the firm’s product(s), as can be seen in Figure 1 (b). Figure 1 There are barely any barriers to enter this market, making it easy to enter and exit according to the firm’s capabilities.

Read More

More about How Do Gasoline Prices Affect Supply And Demand?

Related Topics

Open Document