Industry Research

In the automotive industry , is price expansileity of necessitate considered elastic or inelastic ? Are there substitutes addressable ? Is the good a luxury or a extremity ? ExplainIn the automotive industry , price elasticity of pick out is elastic . When speaking of automobiles , it generally means political machines . Having a stark naked car is just one option in all functional modes of transportation since there are many substitutes , like fetching a bus or train or acquire cheaper vehicle , like a bicycle or cycle . More importantly , people nowadays prefer to obtain used cars . In fact , wholesale prices of used vehicles in 2005 showed their largest annual percentage gain in nine long time . Overall used-vehicle prices rose 4 .6 percent last stratum over 2004 (Sawyers , 26 January 2006 . Thus , upon viewing all achievable cheaper alternatives choosing to have a new car is considered to be a luxuryWhat is the price elasticity of supply for the industry ? ExplainWhen the automobile prices growth , many people would delay buying new cars since they could corroborate for used or their own old cars . In this slipperiness , quantity demanded would be very(prenominal) sensitive to a modification in price , in consideration of a unmindful run perspective . However , an old car wears let out and must be flip-flopd , so quantity purchased will dissolve up again . Thus , if taking this in a long run perspective , price elasticity of demand is less than short run . If the price of automobiles decrease this social class then that will increase the willingness of people to buy the current car models . According to the Economist Intelligence Unit ( declination 14 2005 , the U .S . demand for cars usually rise by 4 annually . Since the U .S . is the largest manufacturer of passenger cars and light trucks in the orbit , with its output of 11 .8 million units in 2003 accountancy for over 20 of world production , this will sum up the purchase of new cars this year significantly .

Therefore , in a short point in time of time , quantity demanded is very sensitive to the change in price . However , at once the stock is rebuilt , people will stop buying new cars because people will only buy new cars to replace old cars Therefore , in a long period of time , demand is less elasticReferencesEconomic Intelligence Unit (2005 , December 14 . United States of the States : Automotive Background . Retrieved butt on 16 , 2006 , from HYPERLINK http / web .eiu .com http /www .eiu .comSawyers , A (2006 , January 23 . Used-vehicle prices take biggest jump since 96 . Automotive News , 80 (6186 ,. 46Appendix BAnnotated BibliographyEconomic Intelligence Unit (2005 , December 14 . United States of America : Automotive Background . Retrieved March 16 , 2006 , from HYPERLINK http /www .eiu .com http /www .eiu .comAs the largest automotive market in the world , the United States accounts for around one-third of world automotive gross sales in 2004 . The automotive industry is one of the prime drivers of the US economy , with an output valued at US 442bn (3 .8 of gross domestic product ) in 2004 , according to the Bureau of Economic Analysis (BEA . The greatness of...If you want to get a full essay, order it on our website: Orderessay

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