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Essay / Research Paper Abstract
This 6 page paper answerers three economics questions concerning sappily and demand and cross elasticity looking at the way different events will impact on prices. The question looks at the reasons behind the fluctuations in gasoline prices. The second question assessing the impact that short of a product or competition for resources may have ion the supply and price. The third question looks at the way a change in demand will impact on suppliers. The bibliography cites 4 sources.
Page Count:
6 pages (~225 words per page)
File: TS65_TEecquestdem.doc
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Unformatted sample text from the term paper:
aspect of economics, is that a good will be sold for a profit. If a firm cannot make a profit they are likely to withdraw from the market. Therefore, when
the cost of inputs increased the cost of the good itself is also likely to increase; this is especially true where a product has a price elasticity below 1, which
is inelastic meaning that the product is not very responsive to changes in price (Baye, 2007). This is generally seen in essential goods, where consumers will carry on bung them
despite increases. This reflects the ability of the gasoline suppliers to increase the prices to the consumer (Baye, 2007). However, to appreciate the influences that increase the gasoline prices
it is also necessary to look at the price of the inputs, as a major influence is has been the changing price of oil. Oil is a major
input into gasoline, it accounts for roughly 48% of the price (GAO, 2005). This is a major influence with the price of oil increasing and decreasing, being highly respionsive to
supply and demand. Generally speaking, when there is an excess of demand over supply the price of a good will increase and reach new point of prince equilibrium between supply
and demand, which may be impacted by supply increasing as suppliers see the potential for higher profits, or as a result of decreasing demand, deterred by the increasing price (Nellis
and Parker, 2006). The opposite is also true. Overt the last few decades there ahs been increasing demand for oil especially from Southwest Asia and China with the developing
economies industrializing and requiring more oil for inputs into different industries. Oil is needed not only for transportation, but it is also a major input into many other sectors, such
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