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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. 1 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. 2 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. 3 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. 4 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. 5