Gm545 Week 1 Case Analysis

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Business Economics GM545 Question 1 Supply and Demand? Where would we be without it? There will always be someone supplying a service or product, while the consumer needs that service or product. One of the biggest products that we use today is fossil fuel. Fossil fuel contributes too many products, the biggest being gasoline. With more people today driving an automobile we are using more and more gasoline. In the past seven years the prices of gas and oil have skyrocketed. Oil went from a very low price a barrel to $99.03 a barrel (As of today). As a person whose family gets royalty rights for oil and natural gas it is a blessing. The price per gallon of gas at the pump is governed by various complicated factors and a whole range of issues which includes - the demand and supply of crude oil along with factors like inflation, local taxes and changes in currency…show more content…
And how? The moment there is speculation that crude will be trading higher, retailers usually increase their prices in an attempt to keep their margins intact for future purchases. Contrarily, when the price of the crude decreases, retailers are not inclined to lower rates as fast as they have raised it in order to maximize profits.” (Austin, 2011) So you can say when the price of oil is rising, the merchants have a small opportunity to gain a profit. Yet when the prices are low, they utilize this to take a advantage of the situation and delay the lowering of prices at the pump. It might be acceptable from their point of view for this reasoning. Do to the fact, if they suffer losses, they may have to shut down their business. This in turn will lead to fewer jobs, reduced competition and even higher gas prices. This is why gas is the price it is now. Question 15, Chapter
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