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Gasoline Demand and Supply - Essay Example

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This essay "Gasoline Demand and Supply" examines the demand for and the supply of gasoline in the market are determined by some special factors. For example, demand is governed by the price of gasoline, the availability of substitutes, the price of those substitutes, geographical proximity to the place where substitutes are available…
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Gasoline Demand and Supply
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Download file to see previous pages According to the above diagram, the positive in demand curve from D1 to D2 will result in an increase in price (P) and quantity (Q) of the gasoline. As a result, the supply curve will shift to the right from S1 to S2. Equilibrium is the point where the quantity demanded equals the quantity supplied, thus there's no surplus of goods and no shortage of goods. Initially, E1 is the equilibrium point and due to the increase in demand, equilibrium shows at E2. However, after the demand increases supply will decrease and the equilibrium point shows at E3.
According to the above diagram, the positive in demand curve from D1 to D2 will result in an increase in price (P) and quantity (Q) of the gasoline. As a result, the supply curve will shift to the right from S1 to S2. Equilibrium is the point where the quantity demanded equals the quantity supplied, thus there's no surplus of goods and no shortage of goods. Initially, E1 is the equilibrium point and due to the increase in demand, equilibrium shows at E2. However, after the demand increases supply will decrease and the equilibrium point shows at E3.
Figure 1: Demand for and Supply of gasoline
According to the above diagram, the positive shift in the demand curve from D1 to D2 will result in an increase in price (P) and quantity (Q) of the gasoline. As a result the supply curve
Source: Review of Economics and Statistics, 57(4), 502-07
According to the above diagram, the positive in demand curve from D1 to D2 will result in an increase in price (P) and quantity (Q) of the gasoline. As a result, the supply curve will shift to the right from S1 to S2. Equilibrium is the point where the quantity demanded equals the quantity supplied, thus there's no surplus of goods and no shortage of goods. Initially, E1 is the equilibrium point and due to the increase in demand, equilibrium shows at E2. However, after the demand increases supply will decrease and the equilibrium point shows at E3.
Suppliers adopt their own strategies in order to meet contingency demand by consumers. As result suppliers tend to change their strategy according to the shifts in demand (Comnor, & Jon, 2001). Assuming a greater degree of pressure on supplier networks coming from greater market demand, suppliers would up their stake in the ultimate outcomes of the corporate strategy and business policy. This is the inevitable result of the growing power of big Gasoline organizations becoming more and more independent of expanding business.
(B) Consumer demand and behavior - related to Gasoline
Consumers are very important for the business organization in determining its corporate strategy. For example, customers can either make or break a business organization on the basis of demand. The business organization depends on customers' perceptive behavior to such an extent that the former has very little freedom in deciding the corporate strategy and production policy in any other possible way. Gasoline prices have a big impact on consumer behavior. Thus consumers are not very responsive to their demand related to changes in gasoline prices. As a result of rising gasoline prices, consumers have been forced to cut down on their other needs and wants needed for their day to day life. It also reduces savings and real income growth and other forms of consumption such as entertainment, eating out, electronic items, and vacations. Thus that the percentage of income set apart for gas and oil is inversely proportional to income. ...Download file to see next pages Read More
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