New Market Opportunities - Gasoline
Autor: mgnance1 • September 19, 2016 • Coursework • 686 Words (3 Pages) • 753 Views
New Market Opportunities- Gasoline
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As you look at prices go up and down day by day, increasing gasoline sales in the US market are due to variability being seasonal and there is an increasing trend in demand. There are dynamics in cultural as well as demographic significants to determin the gasoline specific market prices. The average price per gallon in Durham is 2.10 which is lower than many other states and proviances like Nevada (2.45), West Coast (2.72), Hawaii including others. (Buddy, 2016)
The demand for the gasoline in Durham is not as high as compared to many other proviances thus there is great need to increase the market area so that greater profit can be earned. For example, price of Gasoline in West coast is more than $2.10 so if this company start business in that state, a profit would be made.
The trend of demand and supply of the Gasoline in Durham has been more or less shows following pattern. The demand curve shows the change in the demand of the product with the change in the price. It is the most basic theory of economics, that when the price falls the demand of a product rises and when the price increases demand falls. This inverse relationship between demand and price is called the ‘Law of Demand’. The ‘determination of price’ in a market is set by the forces of demand and supply. Supply has the direct relationship with the price. That is, if the price of a product rises than the supply increase and if the price falls supply decreases. Thus, supply generally shows the preferences of the producer or producing unit while the demand is decided by the consumer. Thus, there must a balance between the demand and the supply so that price can be determined in such a way that it suits to both consumer and producer.
In the case of Gasoline here, the forces of the demand are trying to reduce the price and often react quickly to the reduction in price. The basic exasmple for this is that when the price hike is increased for gasoline then people used to fully their vehile tank before the price hike which shows people love to purchase more at less prices as this will give more utility per unit of consumption. Thus, the price will be set slightly lower to increase the demand and thus profitability in the long run.
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