Question

A comprehensive analysis of demand and supply by taking account the relationship of petrol and the other goods. Must present arguments to prove or disapprove relationship. To some extent students should focus on factors affecting demand and supply

Answer 1

We can take example of petrol and petrol driven cars, vegetables and fruits, motorcycles, pizza,etc. and prove demand and supply conditions accordingly.

1 When prices of petrol will increase demand for cars will get decreased because due to increase in petrol prices people's savings and purchasing power will get decreased and accordingly it will be less affordable to purchase car when petrol prices are increasing, so demand for both petrol and cars will get decreased and accordingly supply will also get decreased for both petrol and cars.

2 When petrol prices will decrease then in that case sale of car will get increased because due to decrease in prices of petrol people's savings and purchasing power will get increased and so sale of car will get increased accordingly and so the demand for cars and when demand for cars will get increased the accordingly demand for petrol will also get increased and accordingly supply of both petrol and cars will also get increased.

3 Due to increase in petrol prices prices of different goods, i.e. vegetables and fruits will get increased since the commercial vehicles which transport vegetables and fruits run on fuel and fuel prices/petrol prices gets increased then prices of vegetables and fruits will also gets increased and this will affect its supply since due to increase in prices vegetables and fruits demand will get decreased .

When fuel/petrol prices will get decreased then prices of vegetables and fruits will also get decreased and due to this demand for petrol, vegetables and fruits will also get increased and accordingly due to increased demand supply of both petrol and vegetables and fruits will also get increased.

4 Due to increase in petrol prices, prices of pizza delivery will also get increased and accordingly demand for both petrol and pizza will get increased and accordingly due to decreased demand supply of both petrol and pizza will also get decreased.

5 Petrol prices also affects demand and supply of motorcycles because when petrol prices gets increased then both demand and supply for motorcycles will get decreased and when petrol prices will get decreased then accordingly demand and supply of motorcycles will also get increased.