Essay Example on Oil and gas are commodities that people crave to Purchase

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 

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