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Economics 1312
201
Project title
Hawra Al-Abkari
201102200
Date
Tuesday, 6th November.
Gas prices is expected to go down next month.
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Introduction:
If the production of gas is expected to go down. There are many markets will be affected such as,
automobiles market, oil market, and bakeries' market. Each one of these markets represents
something different, one is an input, one is a complement and one is a substitute. These markets
could effect on one of the supply side or demand side.
Name of the market: The automobiles market.
Event: Gas is expected to go down next month.
Relationship: Gas is an input for the automobiles.
In this first part of the project I am going to discuss the intuition for what decrease gas prices
would be likely to have in the demand and the supply of both new and used cars. If the
production of gas prices is decreased, how it is going to affect automobiles market. If the prices in
the production of gas is decreased, it will affect largely the supply of the automobiles market. The
decrease of gas prices will obviously enable the demanders of gas to increase. Also if the prices get
lower it will be obvious effected on supplier of gasoline market. Suppliers should produce more
production . So, the prices would not be effected that much.
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Name of the market: bakeries market.
Event: The effect of decreasing gas prices on bakeries market.
Relationship: if the gas prices are going down, the supply will decrease.
We need gas in order to make breads. gas is an input for producing breads in the
bakeries' market. this will affect the supply side of the bakeries' market. Supply will
decrease and the demand might decreased, because poor people will not be able to buy
it if the price is high. And demand might decrease if people start to buy less because of
the high price.
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Figure (2) illustrate the effect of the shift in supply on the bakeries market. So, the
supply rate will decrease when the prices of gas decrease also.
Name of the market: The heaters market.
Event: The effect of gas price on the hearth market.
Relationship: gas is Heaters and gas are complement.
Now I will talk about how the hearth market affects the gas price. gas is a complement
for the hearth that means they are consumed together. So, when we the price of gas fall.
It will affect the demand side. The demand for hearth will increase and will shift to the
right. In addition, since the winter season is close the demand for heating systems will
increase. Decreased gas price will even increase the demand more and more, because
more people can afford to buy them.
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Figure (3) illustrate the effect of the shift in demand on heaters market. This will cause
the demand to increase.
Conclusion
We knew now that the base of the industries is gas and many production could be
effected by gas. The analysis showed that many markets have been affected, one is an
input, one is a complement and one is a substitute. Some markets were been affected
from the supply aspect and other markets were affected from the demand aspect.
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