Read the following extract and answer the questions that follow: Big fuel price hikes announced for Wednesday, 29 Nov 2021 The petrol price will be hiked by 81c a litre on Wednesday, while diesel will go up by between 72.5c a litre (0.05% sulphur) and 74.5c (0.005% sulphur), the department of mineral resources and energy announced. The latest price hike will push the price of petrol - currently around R19.50 a litre - to above R20 in Gauteng and other inland provinces. At the start of November, petrol prices were hiked by R1.21, while diesel increased by R1.48. Illuminating paraffin will go up by 42.2c/l, while the maximum LP Gas retail price will be increased by 183.00c/kg from 1 December. Local fuel prices are determined by international oil prices - as well as the dollarrand value, as South Africa buys oil in dollar. The latest fuel price hikes are due in large part to a sharp fall in the rand against the dollar, which averaged at R15.85/$ over the past month, compared to R14.72 the previous month. The average oil price also increased from $82.50 a barrel to $83. "The key driver [of the higher oil price] is the higher global demand recovery amid a weaker supply response from non-OPEC and other oil producers,” the department said in a statement. “There is a mismatch between demand and supply, i.e., there is more demand for oil products than the market can supply. The US and other major oil consumers are coordinating efforts to try to lower high prices by releasing oil from their inventory stocks, while OPEC and non-OPEC members are refusing to increase oil production to match the global recovery demand."
Read the following extract and answer the questions that follow:
Big fuel
The petrol price will be hiked by 81c a litre on Wednesday, while diesel will go up by between
72.5c a litre (0.05% sulphur) and 74.5c (0.005% sulphur), the department of mineral resources
and energy announced. The latest price hike will push the price of petrol - currently around
R19.50 a litre - to above R20 in Gauteng and other inland provinces. At the start of November,
petrol prices were hiked by R1.21, while diesel increased by R1.48. Illuminating paraffin will
go up by 42.2c/l, while the maximum LP Gas retail price will be increased by 183.00c/kg from
1 December. Local fuel prices are determined by international oil prices - as well as the dollarrand value, as South Africa buys oil in dollar. The latest fuel price hikes are due in large part
to a sharp fall in the rand against the dollar, which averaged at R15.85/$ over the past month,
compared to R14.72 the previous month. The average oil price also increased from $82.50 a
barrel to $83. "The key driver [of the higher oil price] is the higher global
amid a weaker supply response from non-OPEC and other oil producers,” the department said
in a statement. “There is a mismatch between demand and supply, i.e., there is more demand
for oil products than the market can supply. The US and other major oil consumers are
coordinating efforts to try to lower high prices by releasing oil from their inventory stocks,
while OPEC and non-OPEC members are refusing to increase oil production to match the
global recovery demand."
Question 1
a) With the reference to the above case study, discuss the likely factors that
influence the price of fuel
b)
demanded to a change in price when all other influences on buyers’ plans
remain the same. Explain the different types of elasticity of demand.
Demand is the quantity demanded any product at given prices.
D=f(p)
Supply is the quantity supplied of any product at the given price.
S=f(p)
Equilibrium quantity and price is determined where demand is equal to supply.
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