Price plays a very important role in gasoline among other things. Even though the price of gasoline is not at its all time high, it is still high to most people. However, I do not think it should be as high as it is when the income of the consumers is not going up with the price of it. The demand for gasoline drives the price of it up. In the future there is going to be a demand for the electronic cars, and the price of gasoline is surely going to drop. Theories of supply and demand had their roots in the early 20th cent (Supply and Demand, 2010).
Theories of Alfred Marshall, which recognized the role of consumers in determining prices, rather than taking the classical approach of focusing exclusively on the cost for the producer as a determinant ( Supply and Demand, 2010). Supply for Gasoline According to Mike Archbold the gas prices have dropped, and will contine dropping through the summer (Archbold, 2011). As of right now there is a pretty strong supply of gasoline throughout the country. A strong supply of gasoline and the low demand for it have been linked to the struggling economy, which in terms has have lowered the price of gas.
Gas prices are expected to drop a little more, but big drops in gas prices are said to be over unless the country falls back into the recession. Efficient Market Theory Changes in the information are available to investors due to the efficient markets theory because of the fluctuating prices in the common stocks. Gas prices have went up and down since 2006. The weak-form of the efficient market theory explains that future prices will not be calculated by examining prices from an earlier period.
However, the efficient market theory will still be used to predict how the market it going to respond to how well the gas businesses are going in accounting. The gasoline is also reflected in higher year-on-year stock (Langley, 2009). Surplus and Shortage Economic shortages are related to price when the price of an item is set below the going rate determined by supply and demand (Langley, 2009). There is definitely not a shortage in gasoline, on the other hand there may be a surplus even though prices are still up.
It is said that an overproduction of it will inevitably lead to the falling gasoline margins. Conclusion In conclusion this paper has given details about the market equilibrating process and a real-world experience, which is about gasoline. It also consisted of information about the law of demand and the determinant of demand, law of supply and the determinants of supply, and the efficient markets theory. Most important it provides information about the surplus and shortage of gasoline.