Papae

Business Economics– ECON 545

Microeconomic Analysis – Situation C

INTRODUCTION

My cousin Edgar is looking for advice on the profitability of convenience stores and gas

stations. He enlists my help to help him determine the economic factors which may affect his success in purchasing two gas stations. While he believes the continued demand for gas, specifically in India and China, will increase over time, he also contends he can generate sales through retailing convenience store items. I have included my recommendations to him in regards to overall market factors, in addition to addressing three key areas: Determinants of

Demand, Supply, and Economic Justification for the industry and business.

DETERMINANTS OF DEMAND

Those trying to purchase service station business opportunities need to think around five components that can make this buy especially unsafe contrasted with different organizations. Alongside different things, Americans consider the fuel expected to run their vehicles a need. The opportunity to be on the offering end of that merchandise is the thing that drives various business people to purchase service stations. Anyway there are no less than five significant dangers anticipating the purchaser inspired by this industry. Subsequently, it is basic to think about them.

1. Find out what is underground. Among the costliest mistakes when buying a gas station is to examine only visible assets. While the equipment aboveground might be operating correctly, an underground disaster is occurring if gasoline is leaking from storage tanks. Most states are very diligent about enforcing environmental rules for gas stations. For the new owner, especially one not protected by a franchisor, that means enormous clean-up costs, not to mention the loss of business while the tractors dig up contaminated soil and the station has to be rebuilt. Requiring both Phase I and Phase II soil testing as a condition of purchase, is a must for the prospective buyer.

2. One of...