Causes for Shifts in Supply and Demand

Causes For shifts in supply and demand

University of Phoenix

Principles of Economics

212

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Abstract

There are many causes for the shifts in supply and demand of natural resources such as oil. In economics the relationship between sellers and consumers is known as "Demand and Supply". Many variables associated with the demand and supply of oil can cause prices to fluctuate. There is an unending international trade to ensure that we have a consistent supply of oil, and here has been a vast change in the price over the last century yet demand for it remains. Some of the most common reasons for changes in supply and demand in the oil market are availability, capacity of production, politics, and economics.

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Causes For shifts in supply and demand

Supply, Demand and Price Elasticity

The need for oil from every country will never diminish.

Perfectly inelastic demand

Perfectly elastic demand

English: Supply and demand market curves

There is a never ending relationship within many countries to ensure that we have a constant supply of oil. There has been a vast change in the price of oil over the last century yet demand for it remains. It is said that the price differences are a result of the different state taxes, location of the gas stations receiving the gasoline and the transportation cost. Oil is not only considered a raw material but it is being used as a fundamental instrument in order to have company's investments. (Maloney, 2008, para. 1)

It is believed that any time the price of the oil is increased there will be a shortage in the demand. As it has been seen for many years, this is not the case. There have been...