Business Economics 1 Essay Example | Topics and Well Written Essays - 1000 words

Business Economics 1 - Essay ExampleAs third world countries argon moving into the industrialized world, the implore is growing. As this evolution of the world is taking place, more crude oil is being drawn from the earth, which means whizz day the oil supplement result dry up (Presswire). That does bring about the question of whether or not issue is an issue since we are told frequently that one day the earth will not yield anymore oil.But as the oil prices go up, one will find that it is because demand is not staying the same. This is making the aspect of depict a little less of a contributor to the increase in oil prices. When using an oil demand stoop chart, the demand becomes vertical, but when looking at both the confer and demand curves, one can catch up with that both have been increasing at the same rate for the past twenty dollar bill years. Yet recently, the supply curve has not moved at all while the demand curve has increased. If supply cannot keep up with de mand, then the prices will seen an increase. We probably wont see an increase in the supply aspect until supply reaches level best production. When this supreme production or extraction of oil progresss, we will see another increase in the price of oil due to the decline of supply until true maximum production is reached. ... Chances are, the extreme fluctuations in oil prices for the past few years has been due to the fact that maximum production has been reached, which lowers demand. This decrease in demand leads to a decrease in prices just as a decrease in supply leads to an increase in prices. When these price increases happens, the economy sees a recession and when decreases occur everyone feels that all is well (valuesystem). Supply influencesUnfortunately, the supply to a specific market will not be constant. There are several different factors that influence supply such as Price high gear prices will influence makers to supply more oilCost of production These are the c osts that are associated with the productive resources used to bring the oil to the market. These costs can include labour costs, the cost of materials, etc. Technological innovations Oil companies can reduce various costs through new technological innovations that intromit them to perform in a more efficient manner at a lower cost.Objectives of the producer A lot of times the supply of oil can also be dependent upon reach maximisation. There are certain objectives that oil companies have in mind, which can distort our perception of how the supply aspect is really working. There are also other things such as labour blackmail and climate change that can influence supply. These are just some of the factors that can influence the supply aspect of oil that, in turn, influences the fluctuations in cost. Yet supply is only half of the equation since demand is also a very important part of the supply and demand economic theory (Souster). essential influencesDemand is the amount of good s and