Macroeconomics Essay

624 Words Apr 6th, 2012 3 Pages
Everyone’s Gasoline Problems

Fluctuating gas prices can be caused by a number of factors. The price of crude oil and the cost of producing and marketing gasoline have greatly impacted the fluctuation of gas prices that we experience on a daily basis. There has been a significant increase demand for oil worldwide, including growth in other fast developing nations. These nations have significantly grown in the number of citizens who have access to automobiles, and their increasing populations have a strong impact on the amount of crude oil (Forbes, J).
The demand for gasoline has increased significantly, due to economic growth. Also, seasonal changes can pose a serious impact on gas prices. Gas prices increase greatly during
…show more content…
Higher prices will enable Starbucks to produce more that it could otherwise. Eventually, Starbucks will be able to provide sufficient premium coffee to meet the higher demand levels. But if their premium coffee crop were to be destroyed, production of premium coffee would be suspended. This will cause the supply curve to shift backwards, which will then result in a lower quantity of coffee sold and still maintain their high prices until the market finds buyers for whatever remaining premium coffee they have to sell.

Chapter 3 Q. 15

Orange crops in late 2006 and early 2007 were smaller. At the same time, the US also decided to reduce the consumption of gasoline and increased production of ethanol from corn and other grasses. Orange crops were severely reduced, which means that there were fewer oranges available for consumption. Fewer oranges available means the supply curve will decrease. A decrease in the quantity available means the oranges will sell for a higher price, causing oranges become more expensive, which will impact the price of dependent products like orange juice.
Greater quantities of corn and grasses will cause demand to increase. Because corn and grasses take time to grow so this will cause a temporary price increase in prices until the grass production becomes available. When this happens the supply will increase and should reduce the price again.
In these two circumstances the

Related Documents