Everyone around the world is a part of economy and everyone are included in uses of economic rules in daily life. Economic is study about management of scarce resources by societies (Mankiw 2012). We become customer since we are born for various product and services such as food, drink and medical treatment. In other way, there some people are attain various roles in economic world such as producers, traders and agents. In economic view, there are two important thing which is the concept of scarcity of resource and two branches of study in economic that is microeconomics and macroeconomics. Scarcity means that there are limited resources in nature of society and therefore ...view middle of the document...
This clearly shows the widespread use of crude oil and thrived on human life on this earth. With a bit of oil production and limited and demand for crude oil caused the price set by the world market is getting more expensive.
In microeconomic perspective clearly rising crude oil prices had a great impact hostile and critical users or producers. With this increase in spending as a producer on the production of goods and services will rise. Thus affecting the prices of goods and services every business has also increased. This in turn affects the end user had to increase their daily expenses. This is because their purchasing power is decreasing and their income had decreased. For example, a daily essential items up from the previous price. This will certainly affect them because of their previous income is just enough to eat. The rising cost of transportation and processing costs would have been passed on to consumers by raising the prices of final goods transported.
Operators, especially those who are less able to bear the burden of high costs such as rent and tax rate increase to extreme for a business premises. The rate of production by some of the industry of the product will also be reduced because of increased oil prices. In addition to reducing operating costs, manufacturers are also reduces the number of employees to support their oil purchases.
The Organization of Petroleum Exporting Countries (OPEC) plays an important role in determining the level of world oil production, and thus affect the market price. An inflation rate of crude oil occurred in 1970 continued its impact even today. Some factors that cause inflation are increasing is due to the demand-pull. Countries like China and India are clearly developing that require the use of crude oil a lot. World crude oil demand rose by an average of 1.76% per annum from 1994 to 2006, with the highest growth of 3.4% in 2003-2004. Rising demand is highest in developing countries. Global oil demand is expected to rise 37% from 2006 point in 2030, according to the annual report of the Energy Information Administration (EIA). In addition, the continuous increase in the price of oil also causes inflation. Although Malaysia...