Oil a certain service or product (Gordon

Oil and gas are
commodities that people crave to purchase and they are harvest that companies
want to sell. The prices for those particular commodities will vary due to
supply and demand. When buyer demand for a commodity rises, the provider will convene
that demand at a higher price (Owyang Michael & Vermann E Katarina, 2014).  When demand decreases, the seller will lower
prices to persuade consumer purchase.  Many fuel suppliers will lower their prices to
attract their regular consumers to come and fuel up. When supply increases, seller
will lower their prices due to the plenty of product. This increased supply has
lead to decreases in the price of gas at the pump. When in market supplies are generally
decreasing, suppliers will raise the price due to the shortage of the resource.
In the year 2005, Katrina knocked out oil production in the Gulf of Mexico with
stopped oil refinery output in Louisiana and Texas.

Supply and demand is a
good relationship between the price and the quantity. Equilibrium is the situation
at which supply and demand both interconnect. Oil markets will make equilibrium
because prices that are above or below the equilibrium price run to an excess or
shortage (Gately D & Dargay J, 1995). Several new technologies in fuel
efficient vehicles are in high demand and it will make increase the gasoline supply.
 Ultimately, the demand of fuel efficient
vehicles will meet with the demand of lower and more inexpensive fuel costs.

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The price elasticity of
demand assesses the compassion of the quantity demanded to changes in the price
(Gately D & Huntington H G, 2002). Importantly demand is inelastic if it
does not retort much to price changes, and elastic if demand changes a portion when
the price changes. Generally elasticity only depends on where we are on the
demand curve. Elasticity is highest when the price is high for a straight line
demand curve. Raising the minimum wage will consequence in a decrease in
employment for employee who currently earns less than the minimum wage. An
increase in earnings would cause a higher increase in the demand for labor. On the
other hand when elasticity of labor demand is high, elasticity is unitary, the
change is equal and increase in minimum wage can produce lower demand for labor.

Oligopoly
is the middle position between capitalism
and monopoly . An oligopoly is a small unit
of businesses, two or more, that manage the market for a certain service or product
(Gordon Robert J, 2016). This gives these businesses vast influence over price
and other parts of the market. Today there are many oligopoly examples in our
economic system like Sony Music
Entertainment, Kellogg, Google, Microsoft, Random House, Apple, and Samsung. These
worldwide companies race for the top mark in their industry.  It is a market structure is clearly different
from other market shapes. The primary characteristic of oligopoly is
interdependence of the several firms in the decision making i.e Interdependence.
Advertising, Group Behaviour, Competition, Barriers to Entry of Firms, Lack of
Uniformity, Existence of Price Rigidity and no Unique Pattern of Pricing
Behaviour. Advertising is used to help convince consumers to particular
products. They use evocative actions or language that relate to the specific product
being advertised. In an oligopoly market advertising does not play a good role
in this completely competitive market. All are knows that companies have own identical
products, and consumers have full information about the alternatives obtainable
to them in the business market” (Cohen Lauren & Scott D Kominers, 2016).
This is coherent with what we’ve actually learned about the oligopoly and
advertising. Generally advertising creates consumer reliability to a particular
product, then that reliability may provide as a good barrier to entry to other companies
(Cohen Lauren & Scott D Kominers, 2016)

A
monopolist will create where its price is greater than its subsidiary cost,
indicating an under-allocation of wealth towards the product. By controlling
output and raising its price, the monopolist is guaranteed maximum profits, but
at the cost to society of less generally consumer welfare or surplus
(Levin Jonathan & Andrzej Skrzypacz, 2016). The monopolist can indict any
price she prefers but at several point she will end up diminishing her prices
in order to market more of her specific product. In the monopolistic market it
would such reason why marginal revenue is under the demand curve. When monopolist
chooses a price then she will be forced to promote only as much as the
consumers are insisting with that price, specified by the demand curve. In
order to make profit she can rate higher than the average whole cost but stay
right where the actual marginal revenue equivalent to the total marginal cost. Finally
the market would finish up forcing the supply and demand restrictions in the
long run and so she is incapable to cost over the market price.

 

 

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