Supply and Demand

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Automotive Industry Supply and Demand

Katharyn E. Moore

Supply and Demand
The automobile industry has certainly have seen fluctuations in supply and demand, especially in the last decade. The economic turmoil of the United States has only been one factor in supply and demand of vehicles. This is evident with employment and income of consumers, interest rates, gas prices and the consumers need for more efficient cars. The demand for more fuel-efficient transportation increases as gas prices rise and the supply for fuel-efficient cars also rises. Manufacturers will increase the supply of fuel-efficient cars to meet the demand. If the prices of these cars are more than what the consumer is willing to pay, the demand will decrease and inventory of these cars will increase. A decrease in price of the fuel-efficient care will cause the demand to increase and the manufacturer to increase supply at the price the consumer is willing to pay. Equilibrium is the supply and demand of fuel-efficient cars will meet at a price that the consumer is willing to pay and the price the manufacture will charge for the car (Colander, 2011). The resources needed for the industry whether it is employees, raw materials, financial and technology affect supply and demand in the automotive industry. These resources are needed to facilitate the making of vehicles and their supply either abundant or scarce will affect the industry. The unavailability of steel in manufacturing of fabricated metal product decreases the ability to supply the framework for a vehicle will decrease (Gross output by Industry, 2010). The manufacturer will have to decrease the supply. The limited availability will increase prices of metal and decreases demand for the product at a higher price. If the demand for cars is high, the manufacturer will have to pay the higher cost and forward that increase on to the consumer increasing the price of the car. The consumer may not want the higher cost car and demand for...
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