Macroeconomic: Economics and Gas Oil
Russ Graziano
ECON 545
Keller Graduate School of Management
April 13, 2014
Introduction The idea Edgar has for opening up four new gas stations is based on a well based argument making it viable as a profitable business venture. The evaluation on the American consumer to accept the high price for gas oil prices forms the first approach towards establishing a business. Gasoil businesses in the world run as cartel where it supply and prices are determined by the few stakeholders in the industry. The stakeholders form an agreement among their competitors on the price, making and, marketing of the product (Fredy, 2010). The cartel though the production affects the GDP …show more content…
D d MC
Price d KINK P1 E P X D d y Q1 D Quantity Q MR The elastic part of the curve is the dd curve thus an increase in price will lead to a rise in demand for the gas oil. A similar case to the market, if China and India increase their market the prices will also increase. A profit in the oil industry enjoys in the point where MR marginal revenue curve cuts the MC marginal cost curve. At this point, marginal revenue is equates the marginal cost and the profit is at maximum (Tayor, 2007). The supply also affects the oil industry, and it is the amount a producer is willing and can sell at a given price in a given time (Derik, 2010). In the supply of the gas oil collusion remains evident to increase market