Supply and Demand Essay Example | Topics and Well Written Essays - 1000 words

Supply and Demand - demonstrate ExampleThe discussion then shifts to US perspective where in the hurt of the oil is determined to a great extent by the Americans. N untimely 25% of the world oil supplies are consumed by USA. The bind concludes by stating that the price of the crude oil may go up to $200 per barrel in the coming years.The demand in the output markets are determined by the households from the above diagram. A households determination about what quantity of a particular product depends upon the following factors and all the factors are getting touched due to the price boost.Other products include substitutes (Solar power, Electric Battery, Wind power etc.) and completing goods (Cars and Automobiles etc.). Due to this price rise, the prices of these substitutes and complementary goods ordain remain affected. Substitutes, a favourable condition exists and for complementary goods, the condition worsens.As per this graph, the price of oil is having an impact on prod ucers and consumers. The producers/suppliers price the oil as per the law of come out in early 2000s where the oil market was a buyers market. The buns of pricing was cost of production of the least efficient bare(a) supplier.As per this graph, the pricing of oil is having an impact on producers and consumers in the perspective of price hike. ... It is the amount left-hand(a) after a household sells off all its possessions and pays off all its debts.4. The Prices of other products available in the marketOther products include substitutes (Solar power, Electric Battery, Wind power etc.) and complementary goods (Cars and Automobiles etc.). Due to this price rise, the prices of these substitutes and complementary goods will remain affected. Substitutes, a favourable condition exists and for complementary goods, the condition worsens.5. The households tastes and preferences will change.6. The households expectations about approaching income, wealth and prices also will change.Ultim ately, the law of demand - As price rises, quantity demanded decreases and vice versa will play a crucial role in decision making by the households.Graphical outlineWorld Price 80 10 Quantity (Barrels)Oil Pricing before Price hike As per this graph, the pricing of oil is having an impact on producers and consumers. The producers/suppliers price the oil as per the law of supply in early 2000s where the oil market was a buyers market. The basis of pricing was cost of production of the least efficient marginal supplier.World Price 100 15 Quantity (Barrels)Oil Pricing after Price hike As per this graph, the pricing of oil is having an impact on producers and consumers in the perspective of price hike. The producers/suppliers price the oil on three major components where the oil market is now a sellers market. The basis of pricing is based on three