Why Does A Market Become Volatile Market?

Markets are akin to the weather. They are always changing, dynamic, unpredictable, subject to frequent periods of storm and calm, complex, and fascinating. As with the weather, careful study of markets also shows certain forces and patterns underneath the daily and apparently random movements. The essential tool form understanding the movement of prices and outputs in individual markets is called the analysis of supple and demand.
Take the example of gasoline prices. Demand for gasoline and other oil products rose sharply after World War 2 as people fell in love with the auto mobile and moved increasingly to the suburbs. Next, in the 1970's supply restrictions, wars among producers, and revolutions reduced production, with the consequent price spikes seen after 1973 and 1979. Then, as a result of energy conversation, smaller cars, and price wars, the real price of gasoline fell sharply, from about $2.50 per gallon in 1980 to around $1.40 in 1996.          
What lay behind these dramatic shifts? Economic has a very powerful tool for explaining these and many other changes in the economic environment. It is called the theory if supply and demand. This theory shows how consumer preferences determine consumer demand for commodities, while business costs are the foundation of supply of commodities.