Question

Explain how gas prices are influenced by Demand and Supply (cite an example)

Answer 1

Ans) Supply and demand model is an important tool to understand the market behaviour.

If there is an increase in demand for gas, its price will increase. And if its demand decreases, price will decrease.

Similarly, if supply of gas increases, its price will decrease and if its supply decreases, price will increase.

For eg- suppose there is was a hurricane, which destroyed gas exploration site. As a result, supply of gas will decrease due to less availability of input resources. And price of gas will increase.