Microeconomic decisions in the Real World

Situation One: (3 marks)

Finally! Summer is here and you are taking that long-awaited camping trip on Canada Day July 1st long weekend. You and three friends are driving to a secluded lake that is five hours away. You have so much camping gear that you need a truck and that truck has a large (80L) gas tank.

Questions: The price of gas (gasoline) fluctuates.

1. On a seasonal basis, when does the price of gas normally go up and when does it normally go down?
2. What makes the price of gas go up and down?
3. You have the choice of buying and safely storing 80L of gas in your garage. What time of the year should you buy the gas for the trip?

Hint: Relate all your answers to supply and demand.