Project 1 articles - ThePriceofFuel .Ifdemandgrowsorifa...

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The Price of Fuel The marketplace forces of supply and demand determine the price of fuel. If demand grows or if a  disruption in supply occurs, there will be upward pressure on prices. By the same token, if demand  falls or there is an oversupply of product in the market, there will be downward pressure on prices. Those principles apply at the service station level as well. If a retailer prices its gasoline too high, and  without regard to competition, the retailer's customers may take their business to another station with  lower prices. If a retailer loses enough volume, the retailer may then reduce prices in order to retain its  customers. Competition among retail outlets thus affects pricing. You may notice that sometimes there are price  differences between two gasoline stations on a busy street corner and between those outlets and the  only station on a long stretch of highway. More choices generally mean more competition for  business. And although retail outlets may sell gasoline carrying the brand of a major oil company, most  dealerships are owned and operated by independent business people who are free to set the prices  for their products and services.
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This note was uploaded on 03/26/2012 for the course ECON GM545 taught by Professor Gotches during the Summer '11 term at Keller Graduate School of Management.

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Project 1 articles - ThePriceofFuel .Ifdemandgrowsorifa...

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