Question

Discuss how changes in the non-price determinants of Supply and Demand can affect the price of Gasoline.

Answer 1

Non- price determinants of supply and demand can affect the price of gasoline.

the non price determinant of demand like

1) increase in number of buyers in the market,

2)availability of less number of substitutes of the good.

3) more imcome of consumers.

4) future expectations.

All above will leads to incraese in demand and hence, more prices of gasoline.

the non determinant of supply:-

1) decrease in total number of sellers.

2) high input costs.

3) more taxes.

4) future expectations.

All these will decrease in the supply and hence, more prices of the gasoline.