Five Determinants Of Demand Analysis

The five determinants of demand that I will prevail on my cousin before he ventures into the gas station business are the cost of gasoline in the local and global market, prices of related goods such as ethanol which are either substitutes or complementary, household incomes, taste/preferences of consumers related to grades of gasoline, and expectations. (https://www.thebalance.com/five-determinants-of-demand-with-examples-and-formula-3305706).
Now for aggregate demand, the number of buyers in the market is the sixth determinant.
Demand Equation or Function:This is the connection between demand and the five determinants and stated thus: qD = f (price, income, prices of related goods, tastes, expectations)
The above equation states that the
According to the report, 71% of a store’s total sales are gasoline but only 36% of profit is generated by gasoline. Gas station owners make up through sales of other products such as snacks, cigarettes, and drinks. I would recommend my cousin Edgar it would be wise to invest in the two gas stations. Gasoline is a necessity and no matter the cost people will always consume it. Even with the the thin margins, he will compensate with convenience ithem sales. Historically, gas stations have seen some of the lowest profit margins. However, they have shown high margins as indicated in the table below. The net profit shown below indicates an increase of nearly 3% in net profit margins for the 2013 year as compared to 1.6% in 2012. In analyzing the information below provided by Sageworks, I explained to Edgar that gas stations had less pressure on their profit margins from key cost or cost of good sold**. To further explain it to my cousin, I used the equation for price Elasticitiyt of demand. If Edgar started his gas station business at the beginning of 2015, at a cost of $4 per gallon, he would have made a profit within one year by selling at a 3% increase which would equal to