Saturday, September 22, 2018

INDIAN OIL & ECONOMIC CONCEPTS


Applying Economic Concepts With Reference To A Company
Sector: Oil and Gas
Company: INDIAN OIL
1St concept
Economics of Scale

It can be defined as the cost advantage that company enjoys because it produces in huge quantities.
Indian Oil enjoys economics of scale because it produces in large quantities.
2nd concept
Price Determination

Price of any goods/services is determined by interaction of demand and supply of that good/supply.
Government has deregulated the pricing of petrol and diesel so that oil companies can keep price according to market condition.
3rd Concept
Oligopoly

Oligopoly is a type of market where few firms sells differentiated/undifferentiated goods/services.
Indian Oil operates in a oligopoly market where it competes with Bharat Petroleum, Hindustan Petroleum and others.
4th Concept
Cross Price Elasticity of demand
When price of a commodity affects quality demanded of another commodity then concept of cross price elasticity of demand applies.
As price of petrol is more thereby price of petrol car is less. On the other hand price of diesel car is more because price of diesel is more.
5th Concept
Producer Surplus
Producer surplus can be termed as difference between selling price of seller and minimum price at which a seller is willing to sell the product or service.
Due decrease in value of Indian Rupee Indian Oil is enjoying is consumer surplus because Selling price is more than their minimum price.

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