Elasticity of Demand of Petrol and Cng

pic business enterp rising ECONOMICS FINAL REPORT ON ELASTICITY OF invite OF PETROL AND CNG SUBMITTED TO SIR FAISAL sultan QADRI PREPARED BY Syeda Tabinda Naz Anum Zehra Madiha Khan mention We owe our pro plunge convey and deepest gratitude to churchman ALLAH, most merciful, who blessed us with determination, strength, competency and divine help to complete this report. This propound is on ELASTICITY OF DEMNAD OF PETROL. This report is a part of our course titled as Business economics conducted in Iqra University. therefore we would like to acknowledge our course teacher Mr.Faisal Sultan Qadri to give us an chance to work on this project, and allow us to make use of our analytical abilities. It was his advocate and never ending patience that tinge us to complete this report. Our special thanks to our beloved p arnts and friends without their support we would not be able to complete our assignment and their coordination has make us able to achieve the working class in ti me. INTRODUCTION High determines core everyvirtuoso everywhere, notwithstanding not equally. Petroleum determine is something that directly effects every one in society as it is as intumesce major source of power and fuel. gather upDemand is defined as the pass oningness and aptitude of a consumer to purchase a inclined(p) product in a given frame of time. DETERMINANTS IF DEMAND Overall affect can transmute, moving upward or downward, because of kinds in P = toll of otherwise goods ( modestys and complements) I = income N =no. of buyers T =tastes and preferences Ex =expectations CHANGE IN INCOME With the rise in income of people they can step-up the usage of product which allow for pass in increased demand. CHANGE IN PRICE Change in worth depart also result in demand curve of that product. Here we impart discus the effect of change in price of natural gas on its demand of consumption. machine AND PETROL OR CAR AND CNG (Petrol Vs CNG) The general trend is that when the price of the substitute decreases the demand of the product decrease and if the price of the substitute increases demand for the product increase. In my sense, the gasolene and CNG ar the substitutes to each other. instantly if the prices of the Petrol increase the demand for gas will change. Many people will tend to make their Car CNG cylindered. just now if the hurt of the CNG increase, but it will ride out lower to the price of the Petrol, so it will not affect much much to the demand of the CNG. No one will change their CNG Kits.So it means that the petrol is more e detainic than the CNG in damage of Demand. Petrol has more snatch than CNG. In Pakistan the majority of private vehicles have converted to CNG because of cheaper price as compared to petrol. Only opulence cars and official vehicles now run on petrol. Almost all car manufacturers in Pakistan now produce company fitted CNG fit out versions. Recent hikes in CNG prices have downplayed the enterprisi ng ventures of some of the stakeholders in this sector. It is expected that price of the CNG and Kits will come down as competition among manufacturers grows.LandiRenzo Pakistan is also exporting CNG kits to assorted countries including China, Brazil and Italy. Almost 2 one million million vehicles on the countrys roads have soprano fuel options. ELASTICITY OF DEMNAD Given are the prices and quantity of petrol showing snapshot of demand subsequently an increase in price of petrol When price of petrol was 31. 8/litre in 2000, victimisation cng in cars was not common but as petrol prices began to raise numerous people be likely to make their Car CNG cylindered because cng prices were very cheap and stable as compare to petrol prices. now the current price of petrol is 66/litre and the price of cng is 48/kg still very economical for users. agree to International Association of Natural flub Vehicles, as of December 2008, Pakistan has the worlds highest come of vehicles runnin g on squiffy Natural Gas (CNG). The number is 2 million. Pakistan also has the Worlds highest number of CNG refueling stations. Because Petrol prices in Pakistan are among the highest in the region as well as natural gas is found abundant and locally in Pakistan so this also very major contend of its cheapness.In 2000 the total number of vehicles in Pakistan was 4. 9 million which has increased to 8 million in 2009. By manifest 2006 about one million vehicles were converted to CNG as compared to 700,000 vehicles during the same period last year, showing an increase of 43 per cent. With these developments Pakistan has obtain the leading country in Asia and the triplet largest user of CNG in the world after Argentina and Brazil. We can calculate the elasticity of petrol easily by considering its change in price within year. Price Quantity 59 8000000 million 6 6000000 million Solution Formula ask for cross price elasticity change in quantity/change in price x PY/QY 2million x62. 5 7 7million =285714. 28 x 0. 000009 =2. 57 and so demand is elastic and petrol and cng are substitutes. GRAPH SHOWING ELASTICITY OF DEMAND OF PETROL pic References http//www. pakistaneconomist. com/issue2002/issue4/f. htm http//pakistaniat. com/2009/07/14/pakistan-cng/ http//www. thenews. com. pk/editorial_detail. asp? id=162379 http//www. brecorder. com/index. php? id=262150=2=