Supply Demand in Gas Price

In: Business and Management

Submitted By alberto2104
Words 3605
Pages 15
Microeconomics Project Paper
Course Project 1
Economics 545
Summer 2014 Session B
Prof. William Mapp
Patricia Shomo
September 13, 2014 Situation C Last night about 7pm, I went to fill up on gas at the closest gas station by my home in Merrillville, Indiana. The Speedway gas station had gas for $3.49 a gallon for regular unleaded gas. Midgrade gas was $3.69 a gallon, Premium was $3.89 a gallon, and Diesel was $3.89 a gallon. I always try to fill up before the work week, as I do not want to get stuck in Chicago, Illinois where I work, and have to fill up on gas. Gas prices are dramatically different in my 40 mile radius. Today, gas prices in Chicago off my exit for work are $3.99 a gallon for unleaded gas at the Marathon gas station at the corner of South Blue Island Ave and Western Ave (Gas Prices in 60608 Zip Code, GasBuddy). That is 50 cent savings per gallon. If I just filled up 10 gallons, which is a savings of $5. It doesn’t sound like much, but I used to fill up twice a week on my about 46 mile commute to work. For the month, that would be an estimated savings of $40 if I do not use my vehicle for anything else but work. Now my cousin Edgar, who is always thinking about the next get rich scheme, is thinking about possibly opening up two gas stations. He believes that he will make a good profit if he also sells convenience items at both of his gas stations. He found out I was taking this Economics course and figured I would be happy to help him research his idea of opening two gas stations in the area. I wasn’t too thrilled, as he always is trying to find get rich quick schemes, but this actually seemed like a legit prospect and it sparked my interest. Not that I am thinking about opening a gas station, but just what entails the gas industry. I mean, gas prices vary greatly by states, taxes, neighborhoods, and competition. Gas prices…...

Similar Documents

Gas Prices

...Individual Paper- Gas Prices Petroleum gas affects many of us when it is constantly increasing and decreasing all the time. Over the past few years gas prices have varied from $3.11 a gallon to $3.97 a gallon. Petroleum gas prices do not just affect the companies that provide the product but affects the people of the United States. When gas prices increase it can cause many problems with people getting to where they need to go. Many people cannot afford the prices with jobs they have now, which causes them to miss days of work causing them to lose their jobs. Petroleum gas can affect many people even farmers when it comes time to take care of their crops causing many people not getting the products they need. When all these people cannot afford the prices of gas they tend to change how they are doing these things. For an example farmers not being able to process their crops can cause them to have to have smaller crops. This will lead other products from their crops to rise in prices when it goes to the stores. Market equilibrium in this case refers to a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers (Colander, 2010). The constant changes in gas prices will affect the product itself along with the market and equilibrium prices. When the price in gas increases the demand for the gas will lower due to the amount it takes to fill a......

Words: 854 - Pages: 4

The Evolution of House Price in the Uk and the Factors That Affect the Demand and Supply of Houses

...evolution of house price in the UK and the factors affecting 3 supply and demand 3. The price and income elasticity of housing demand 9 4. Literature 11 1. Introduction The aim of this study is to explain the changes in the prices of houses by shedding light on factors affecting the demand and supply of houses in the UK. Firstly, we will look at the evolution of house prices in the UK since 2006 and examine relations between house prices and output, employment and mortgage interest rate. Also, supply of houses will be discussed by noting changes in the number of new houses and factors such as land cost, building cost. Then, in the next section we will proceed to examine the factors affecting the sizes of different elasticity of demand 2. The evolution of house price in the UK and the factors affecting supply and demand Over the last four decades, the UK housing market has been subject to boom/bust cycles and Stephens (2011) indicates that UK has one of the most persistently volatile markets in the world. Especially, since 1997 there has been a record growth in UK house prices. The above chart indicates that there are significant fluctuations the in UK housing market. House prices experienced steady growth during both 2006 and 2007 and reached their peak in late 2007. As the end of the 2008, the average house prices had fallen by around 15% (Osborne, 2008). In 2009 prices......

Words: 1826 - Pages: 8

Gas Prices

...gasoline in the U.S. in the past week likely could report the price paid per gallon. Consumers closely follow gasoline prices, and with good reason. U.S. consumers have experienced dramatic increases and wide fluctuations in gasoline prices over the past several years. During 2004 and 2005, U.S. consumers spent millions of dollars more on gasoline than they had anticipated. In the spring of 2005, the national weekly average price of gasoline at the pump, including taxes, rose as high as $2.28 per gallon. Steep, but temporary, gasoline price spikes have occurred in various areas throughout the U.S. Since the mid-1990s, consumers on the West Coast, especially in California, have observed that their gasoline prices are usually higher than elsewhere in the U.S. Rising average gasoline prices and gasoline price spikes command our attention. What causes high gasoline prices like those of 2004 and 2005? What causes gasoline price spikes? These important questions require a thorough and accurate analysis of the factors – supply, demand, and competition, as well as federal, state, and local regulations – that drive gasoline prices, so that policymakers can evaluate and choose strategies likely to succeed in addressing high gasoline prices. This Report provides such an analysis, drawing upon what the Federal Trade Commission (FTC) has learned about the factors that can influence average gasoline prices or cause gasoline price spikes. Over the past 30 years, the FTC has investigated......

Words: 65952 - Pages: 264

Supply and Demand

...CAR Explain factors that could cause possible changes in supply and demand. 1. Time of year - at end of year people want to wait for next model year. At beginning of year the current model in more demand than last year’s model. 2. Price of gas - SUV (gas guzzlers) become less desirable when gas is high. 3.Fad - going green is chic so hybrids and flex fuel and smaller cars are desirable. 4. Taxes - governments can given lower taxes or rebates to stimulate purchase and purchase of specific types. Cash for Clunkers removed any cars from the market since they had to be destroyed and new cars had to be bought. 5. Politics xenophobia- makes purchase of foreign cars less desirable. Anti-Indian or Chinese may make sales of there cars fall in the US. 6. By American fads campaigns by manuafactures; union; patroit groups. 7. Bad news about product- run away Toyotas and the jokes on the Letterman and Leno shows. Substitutes: Truck; bicycle; motorcycle; public transportation; ride share; sharing car with others (like a time share). Complements are parking space; ski/bike rack; extended warranty; insurance; stereo system; gps; alarm system; vanity license plate; custom paint; trailer hitch; sexy rims. Most people require one car so you must by a new one or a used one. It not likes a pet rock where we can all walks away from buying one. There will be a residual market (demand) at all times but probably never zero demand, Example: The competitive market that we face today......

Words: 898 - Pages: 4

Supply and Demand and Price Elasticity Paper

...Supply and Demand and Price Elasticity Paper Betty Hargrove ECO/212 January 30, 2013 Vivek Singhal Introduction After careful evaluation of our daily commodities we have chosen, soap, oil, sugar, salt, tissue, flour, toothpaste, deodorant, electricity, and wheat. These lists of commodities are necessary in a basic style of life. Our chosen product to focus on throughout our paper is sugar. We will address the supply and demand shift of sugar in a market economy. Furthermore, we will address supply and demand and price elasticity as well as whether our chosen commodity is a necessity or a luxury. Supply and Demand Shift There are limited explanations of why the demand and shifts in sugar vary. One of these reasons is because of the federal tariffs that are put on sugar. A tariff or tax on the import or even export increases the price and make it less in demand. No one wants to pay more for anything that we were paying less for a week ago. Also now there are a few different substitutes of sugar then using the real things. There are brands such as Equal, Splenda, and Sweet and Low. These are known as artificial sugar substitutes. These artificial sugar substitutes are sometimes found in food that we consume daily depending on our likes. Items that are, labeled as “diet” or “sugar free” use artificial sweeteners. There is “sugar free gum” and “diet soda”. These products typically have artificial sweeteners. The demand for the sugar is how much the consumers are......

Words: 2096 - Pages: 9

Gas Prices

...Today’s rising gas prices is a great concern for me in the economy we are in at the moment. The United States has a national debt level over 14trillion dollars and talk from many politicians is to raise taxes to pay for that debt. With that lingering in the back of our minds we have gas prices at the front. For many of us gas is a necessity to get from point A to B for many reasons such as, work, go to school, go to the grocery store, and doctor visits. These are reasons we cannot afford to miss and therefore must buy gas. College students are the ones that are being hit the hardest with rising gas prices. The majority of college students are on a tight budget as it is. Gas is rising towards $5 and that is even before summer prices hit. College students having to pay that just to get to school on top of paying for school, is insane. Along with the great possibility of taxes rising it is even harder and harder to live comfortably. If college students did not have it hard enough with trying to handle school loans, trying to eat somewhat healthy, basic essentials and now the even bigger worry of gas. With all that is going on in the world and with our own economy the government should give at least college students with some sort of break. I recently read an article talking about how California college students have little public transportation therefore forced to buy gas. The 3million California College Student are trying to cut cost other ways. Some were not buying food and......

Words: 340 - Pages: 2

Supply and Demand

...popular "must have" toy is in short supply. And there's usually a strong secondary market for the item – with parents paying well over the retail price just to make their children happy. Then, in January, stores reduce the prices of their remaining holiday items – cards, decorations, and so on. Why do parents – and stores – behave this way? The answer is in the laws of supply and demand. Together, these laws give us strong clues about what to produce, how much to produce, and how much to charge. Because supply and demand play such a central role in our economy, it's important to understand how they operate – and how you can use them to analyze decisions about price and quantity. The Law of Demand Demand, in economic terms, shows how much of a product consumers are willing to purchase, at different price points, during a certain time period. After all, we all have limited resources, and we all have to decide what we're willing and able to purchase – and at what price. As an example, let's look at a simple model of the demand for a good – let's say, gasoline. (Note that this example is illustrative only, and not a description of the real gasoline market.) If the price of gas is $2.00 per liter, people may be willing and able to purchase 50 liters per week, on average. If the price drops to $1.75 per liter, they may be able to buy 60 liters. At $1.50 per liter, they may be prepared to purchase 75 liters. Note that while some gas usage is essential – driving......

Words: 1900 - Pages: 8

An Economic Analysis of Demand, Supply, Prices and Elasticities

...provides an economic analysis of South African Maize. The objective of the assignment is to find a non –governmental price regulated commodity and examine the determinants of demand and supply, as well as prices, and elasticities of the commodity Table of Contents Introduction: 2 The determinants causing shifts in demand and supply: 3 Price movements: 4 Price and/or income elasticities: 4 Conclusion: 5 References: 5 Introduction: In Africa, South Africa’s economy is one of the largest (one-quarter) contributor’s to the nation’s economic Gross Domestic Product. Even though the manufacturing sector is now a sizeable donor to the South African economy, commodities do still provide an ample section to the economy (Simpson, 2012). A commodity is known as a raw material this is exchanged (bought and sold) by trade partners. It can also be a primary agricultural product (Parkin et al., 2008: ). South Africa’s agricultural sector does not have a large impact on a global scale upon the world’s agricultural trade. Although does export cereal grains in large quantities as well as stocks the country with cereal grains’ seeing as it is one of South Africa’s staple foods (Simpson, 2012). In economics, questions result from people wanting more than they can get. What is available for individual’s consumption is limited by time; incomes received; and by the prices of the goods and services people must pay. The goods and services available are constrained by the limited......

Words: 1683 - Pages: 7

Demand, Supply and Prices in the Housing Industry

...Demand, Supply and Prices in the Housing Industry F. Hill ECO/365 Principles of Microeconomics July 30, 2014 Mr. Keith Watts Abstract The slowdown in the housing market in the US has been accompanied by a sharp fall in house prices and a glut of homes for sale in the market. While the idea that this high number of dwellings for sale should place downward pressure on house prices is intuitive, little empirical work has been done in this area to assess the factors affecting house prices. This paper explicitly models the relationship between changes in prices of houses and various measures of housing demand and supply. A simulation model has been included to help explain the evolution of the housing market and enable one determine the equilibrium price, quantity and prices. The company under consideration is GoodLife management- a property management company that manages seven communities in the city of Atlantis. Keywords: Housing market, supply and demand, price elasticity and economics. Introduction From the demand and supply curve of the firm, various microeconomics and macroeconomics can be identified. Microeconomics looks at the behaviors of individual people and companies within an economy. It is based on the idea of a market economy, in which forces of demand and supply are behind prices and production levels of goods and services. Microeconomics is concerned with supply and demand in individual markets, individual consumer behavior and individual labor......

Words: 1095 - Pages: 5

Gas Prices

...Paul Fuller Problem: Gas Prices Are to High One of the major issues in America is gas prices are to high. I lived in Jacksonville Florida where gas prices were almost four dollars a gallon. This can be a major problem for families on a budget who cant fill their tank to take their kids to school, buy food, or even make it to work. A lot of people wonder why gas is so high. Commodities traders cause high gas prices. They bid up the price of gas contracts on the commodities futures markets. These commodities exchanges allow investors to buy contracts of gasoline for future delivery at an agreed upon price. However, many traders have no intention of taking ownership of the gasoline. They plan to sell the contract for a profit, instead. The most immediate thing we can do is reducing our usage of gas, either through driving less or increasing fuel efficiency. Surprisingly, the best way to increase fuel efficiency is to keep tires inflated. Longer term, we can change our need for oil and gas by switching to alternative fuel vehicles, using public transit and moving closer to work to reduce commuting time. This will reduce the impact on each of us individually by reducing use. Could this reduction in itself reduce the high price of gas? It could, if it could reduce demand for oil enough to lower oil prices. It would have to happen on a sustained basis over a long period of time. That’s because gasoline accounts for only 20% of each barrel of oil. Oil companies would......

Words: 326 - Pages: 2

Gas Price

...at the gas station has been a much more pleasant experience for Americans since last fall. Regular gas is now less than $2 a gallon in many states, down from around $3.30 just a year ago. But how long will that last? It's just one of many questions stemming from the extraordinary drop in crude oil prices — a development that has boosted consumer confidence, hurt once-booming energy states and presented new opportunities — and challenges — for the U.S. and global economy. Q: Why did oil prices fall so much, so fast? A: A confluence of factors has contributed to the more than 50 percent slide in oil prices since September. The biggest is the steady rise in world petroleum supplies, mainly because of the shale-oil revolution in the U.S. Thanks to hydraulic fracturing, or fracking, and other drilling techniques, the U.S. has accounted for more than 80 percent of global crude production growth in the last five years. More recently, an increase in oil output in Iraq and Libya has further boosted capacity. At the same time, there are signs of softening demand. Economies in Europe and Japan have been stagnant, and the Chinese economy, the biggest driver of global oil demand, is slowing down. The strong dollar also has helped pushed down oil prices. Q: How long will it last? A: Low prices at the pump may be short-lived because the cost of crude is likely to start rebounding in the second half of this year. That's based on predictions of future supply and demand,......

Words: 1068 - Pages: 5

Eco 212 Week 2 Individual Supply and Demand and Price Elasticity Quiz

...ECO 212 Week 2 Individual Supply and Demand and Price Elasticity Quiz To Buy This Click Here http://www.uoptutors.com/ECO-212/ECO-212-Week-2-Individual-Supply-and-Demand-and-Price-Elasticity-Quiz Resources: Principles of Economics textbook and Tomlinson Economics Videos •    Prepare to take the Supply and Demand and Price Elasticity Quiz. Questions Quiz week 2 1. The word that comes from the Greek word for “one who manages a household” is a.  market. b.  consumer. c.   producer. d.  economy. 2.  The word “economy” comes from the Greek word oikonomos, which means a.  “environment.” b.  “production.” c.   “one who manages a household.” d.  “one who makes decisions.” 3.  Resources are a.  scarce for households but plentiful for economies. b.  plentiful for households but scarce for economies. c.   scarce for households and scarce for economies. d.  plentiful for households and plentiful for economies. 4.  Economics deals primarily with the concept of a.  scarcity. b.  poverty. c.   change. d.  power. 5.  Which of the following questions is not answered by the decisions that every society must make? a.  What determines consumer preferences? b.  What goods will be produced? c.   Who will produce the goods? d.  Who will consume the goods? 6.  Albert Einstein once made the following observation about science: a.  “The whole of science is nothing more than the refinement of everyday thinking.” b.  “The whole of science is nothing more than an......

Words: 3210 - Pages: 13

Price Elasticity and Supply & Demand

...Price Elasticity and Supply & Demand Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity Event Market affected by event Shift in supply, demand, or both. Explain your answer. Change in equilibrium Frozen orange crops in California Orange juice Supply (left)—Not as many available oranges to offer consumers. Price will increase and quantity will decrease. Hurricanes in the Gulf Coast Oil and seafood Supply (left)—Not as much oil or seafood available to offer consumers. Price will increase and quantity will decrease. Cost of cotton decreases Clothing Supply (right) – More clothing available to offer consumers. Price will decrease and quantity will increase. Technology improves efficiency in pasta manufacturing Pasta or pasta related products (supermarket foods, restaurant foods) Supply (right) – More pasta or pasta related products available to offer consumers. Price will decrease and quantity will increase. 1. What do substitutes refer to in economics? Give an example of two substitutes. A substitute refers to an alternate good that consumers are able to purchase when the original good had a price increase. Examples of substitutes are when consumers buy margarine when the price of butter increases or buy miracle whip when the...

Words: 311 - Pages: 2

Supply, Demand and Price Elasticity

...tends to be customer-based, and as organic as possible. Monetary Resources Monetary resources are critical in any organization. Although this organization is an entity of the government, money is as vital as ever. Using the MSMO vehicle allows the organization to provide more work, at a competitive price. NASSCO has been awarded the contract to be the prime contractor to SWRMC, with multiple sub-contractors to support the work load. However, without the monetary resources, this option would fail to exist. Another aspect of money is salaries. Salaries pay people’s living, and can either make employees very happy, or very unhappy. Importance falls on keeping employees happy. Happy employees are productive employees. Knowing how to manage finances is a key role in the success of a business. Working for the military makes it quite difficult to manage budgets. As the years of the recession and war are going by, all aspects of the military are expected to do more with less. Innovative ways of managing the budget are coming about all the time, however, the money for work that is conducted at SWRMC comes from multiple sponsors. The final major need for monetary responsibility lays in supply. Without material, maintenance technicians cannot perform their tasks. With tasks incomplete, ships may go elsewhere for repair and maintenance, and the employees at the command will then be redeployed elsewhere. While SWRMC has had problems adapting to the financial crisis, it has learned to......

Words: 938 - Pages: 4

Gas Prices

...in prices for the last decade. The current price of gas at my local Quik Trip is $3.63. This price has been as low as $2.99 and has been as high as $3.99 in the last four months alone. Many of my fellow G.O.P. brothers and sisters will have you to believe that President Obama is solely to blame for these price hikes. This is the furthest from the truth. There are many reasons that our prices at the pump are increasing, many of which the President has little power to change. As was previously stated, gas is a commodity. As such it is affected by market trends. Gas prices are also affected by external issues on which the President has little say. The first thing that you learn when you take an economics course is the theory of supply and demand. Think of a child’s seesaw. The recession depressed oil demand, which depressed gas prices. As the global recovery takes hold, more people are working and driving. This is being felt not only by American’s, but by the entire world. Until supplies catch up to the demand we will be looking at even higher prices at the pump. According to Benoit Faucon, “The bottom line for demand: Global consumption of oil and liquid fuels should increase by about 1.3 million barrels a day in the third quarter from the first quarter, according to the U.S. Energy Information Administration. But supply will fall by about 310,000 barrels a day in the third quarter from the first.” (Faucon par 14). Global politics play a part in the price we......

Words: 1225 - Pages: 5