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Discuss How The Non-Price Determinants of Supply and Demand Can Affect The Price of Gasoline

The document discusses how non-price determinants of supply and demand, such as branding, market size, demographics, seasonality, available income, complementary goods, and future expectations can affect the price of gasoline. These factors can change the quantity of gasoline demanded irrespective of price. For example, if family income decreases, they may drive less and demand less gasoline, decreasing the price. An externality is an impact on a third party from production or consumption. A example of an externality related to gasoline is the rise of electric cars decreasing demand and price for gasoline as more consumers switch to electric vehicles like Tesla.

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Asma Ali
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50 views3 pages

Discuss How The Non-Price Determinants of Supply and Demand Can Affect The Price of Gasoline

The document discusses how non-price determinants of supply and demand, such as branding, market size, demographics, seasonality, available income, complementary goods, and future expectations can affect the price of gasoline. These factors can change the quantity of gasoline demanded irrespective of price. For example, if family income decreases, they may drive less and demand less gasoline, decreasing the price. An externality is an impact on a third party from production or consumption. A example of an externality related to gasoline is the rise of electric cars decreasing demand and price for gasoline as more consumers switch to electric vehicles like Tesla.

Uploaded by

Asma Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Discuss how the non-price determinants of Supply and Demand can affect the Price of

Gasoline.

The non-price determinants of supply and demand include Branding, Market size,

Demographics, Seasonality, Available income, Complementary goods, and Future expectations.

These non-price determinants are essential and plays important role in affecting the price of

gasoline. The reason behind this is their ability to change the number of units sold of products

and services, irrespective of their prices[ CITATION Ste202 \l 1033 ]. If the number of buyers

increases the demand for products increases. If the number of buyers decreases the demand for

products decreases. In the same way, if the demand for gasoline in the market increases the price

of gasoline also increases.

The non-price determinant factor of available income is an example of the above

situation. If the income of families decreases they will not be able to afford cars or gasoline for

routine purposes. They choose to travel through public transport or busses, this will decrease the

gasoline demand and will also impact its price.

In economics, what is the definition of an externality? Can you provide an example

of an externality related to gasoline?

An externality is a situation that occurs when the production or consumption of a good

causes an impact on a third party. These conditions occur when a huge amount of market is

attracted towards something new or any substitute product the price of the old product

automatically decreases. This externality for the old product would be negative and for the new

one, it would be positive. This impact can be positive and negative. Gasoline is a fossil fuel that
is made from crude oil and other petroleum liquids. These liquid petroleum’s are used in

vehicles.

For example, this is a modern era every individual is obsessed with technology and

advancement. Elon Musk is one of the powerful entrepreneurs and businessmen who is the

owner of Tesla electric cars. If individuals start replacing their cars with electric cars of tesla it

would decrease the price of gasoline to a huge extent. This externality would be positive for the

Tesla electric car owner Elon Musk and negative for the regular car owners or gasoline.
References

Bragg, S. (2020, December 23, ). Non-price determinants of demand definition. Retrieved from

[Link]

[Link]

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