Friday, September 11, 2015
How do gasoline companies answer the fundamental economic questions when price controls are not in place?
Gasoline companies answer the fundamental economic questions when price controls are not in place by many different factors. The different factors come from: what to produce, how to produce, and for whom to produce. Gasoline companies ultimately decide how much to charge for a gallon of gas, because everyone needs gas so whether or not it's $1.00 or $4.00 a gallon people will still buy it. The gasoline companies produce gas and the government doesn't have a huge regulation in the gas industry. Gas prices are also controlled by the cost of oil and as the cost of oil fluctuates, the cost of gas will change with the cost of oil. Gasoline is a natural resource and a fossil fuel so companies don't really make it, they just find it and sell it, and sometimes add some chemicals to the gasoline mix to enhance the efficiency of the gas. Gas is something that is produced for almost everyone that owns a car, and it is somewhat true that the people with the most money get the most gas, but that only really applies to if we have a shortage. Gas companies have the control over how to control the price of gas, and most of the factors that go into creating and finding the gas.
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