Economics of the Automobile Industry Essay -- Vehicle Car Economy

A fomite is one of the biggest purchases a person depart ever make. Over the years, the prices of an travel have increased due to the muster of inflation. Due to a price index, the price of an motorcar changes over a certain period of time. Economists compare averages of railway cars to calculate the cost of each vehicle that presents itself on a car lot. When exclusively of the above is calculated inwardly the purchase of an automobile, it affects every area of making the automobile to selling the automobile. every(prenominal) of these factors are impacted together for the automobile industry as a whole. In the automobile industry, there are factors that causation a foment in the planning and price elasticity of the supply and demand. These factors can cause the supply demand to reduce or raise the demand for the automobiles. ace factor to consider is if the price of steel rises. Automobile manufacturers go forth past produce fewer automobiles at all different price lev els and the supply contract will then shift. Another factor to consider is if automobile workers decide to go on strike for higher wages. The company will be forced to pay more for labor to build the resembling number of automobiles. The supply of these automobiles will decrease. Lastly, another factor that can curve a shift in the supply curve could be if the political relation imposes a new tax on car manufacturers. In all of those cases, the supply curve will move because the beat supplied is lower at all price levels. As the supply curve moves in the automobile industry, the equilibrium price and quantity sold will change with this shift. When the automobile manufacturers see this shift in supply, they will then raise their prices and the quantity sold will fall. Car manufacturers will also develop... ...asticity of Demand. Retrieved December 3, 2011, from http//www.mackinac.org/article.aspx?ID=1247Mason, P. (1998, June). Race, cognitive ability, and wage. Retrieved January 14, 2012, from http//findarticles.com/p/articles/mi_m1093/is_n3_v41/ai_20809842OSullivan, A., & Sheffrin, S. (2005). Economics. Upper Saddle River, New Jersey Pearson Prentice Hall.Spatz, J., & Nennenkamp, P. (2002, January). globalization of the automotive industry-traditional locations under pressure. Retrieved January 14, 2012, from http//www.uni-kiel.de/ifw/pub/kap/2002/kap1093.pdfThe Social Studies Help Center (n.d.). pecuniary and Fiscal Policy. Retrieved November 5, 2011, from http//www.socialstudieshelp.com/eco_mon_and_fiscal.htmWhitehead, J. (2006, May 8). Price elasticity of demand. Retrieved December 3, 2011, from http//www.env-econ.net/2006/inelastic_short.html