Course Project 2
Professor Mapp
Shruti Sadhwani
April 2016

I. II. Introduction

“Cousin Edgar is always thinking of the next business idea. This time, he plans to invest in buying two gas stations. He reckons American consumers have come to accept the high gasoline prices, and estimates world prices for gasoline will increase even further due to increasing high demand from India and China. Besides, Cousin Edgar thinks he will make a good profit on the sale of convenience items at each station. But before buying the gas stations, he decides to ask for your advice since you are taking this course in Business Economics.

You recall reading about making pricing decisions for gasoline on pages 173-174 of the textbook. You also recall reading about perfectly competitive markets in Chapter 12, and the need for differentiation in Chapter 13. Being skeptical of Cousin Edgar’s optimism on the profitability of selling gasoline and convenience items, you decide to research the significance of the influence that macroeconomic conditions can have on the success of a gas station. So you research the economy in terms of GDP growth rate, interest rates, level of unemployment, the business cycle, fiscal policy, monetary policy, international trade, and demographics. You want to provide Cousin Edgar with the most informed advice possible. In addition to macroeconomic issues, you also evaluate the gas station idea from longer-term perspectives.”

My Cousin Edgar is considering opening a chain of gasoline stations. He projects this will be a lucrative investment since over the last several year’s fuel prices have steadily increased. Cousin Edgar believes people have come to accept the high gas prices and will continue to purchase. Along with his income from gas, he is planning to sale convenience items in his stations which will add to his revenue. However, my Cousin