ECO 365T UOP Wk2 Laws of Supply and Demand Discussion

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xngulfriregxf

Economics

ECO 365T

University of Phoenix

ECO

Question Description

I'm working on a micro economics discussion question and need an explanation and answer to help me learn.

The laws of supply and demand state that as consumers see rise in prices, they will consumer less. This smaller consumption will lead to lower demand, which will drive prices lower due to unsold inventory. However, when it comes to price of fuel, a steady increase in prices doesn't seem to be driving demand much. However, if the price breaks a certain "psychological pricing" point around $5 per gallon average nationwide, the demand for fuel just drops like a rock. How can we explain this unusual behavior for fuel? What does everyone think?

Explanation & Answer:
175 words
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Explanation & Answer

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1

Why the Oil Market is affected by Psychological Pricing

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2
Behavioral patterns and the sediment factor are the underlying realms shaping the
demand dynamics of oil and the infamous “psychological pricing” feature....

Nqqvrwra (10990)
UC Berkeley

Anonymous
Really useful study material!

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