The Effects of Supply and Demand
University of Phoenix
16 August 2010
The effects of Supply and Demand
Many items factor in on a decision to buy anything these days. I have chosen a car to be the item that I will discuss today. I will be discussing what factors can cause possible changes in supply and demand for my good. I will also discuss some substitutes and compliments for my good. Finally I will discuss how the necessity of my chosen good impacts price elasticity. Many factors can cause changes in supply and demand when going to buy a car. One factor that can cause changes in demand would be when the national income falls. When people are struggling with money, they are not able to go out and buy new cars. When the national income rises then so does the demand for cars. Another factor that can cause the demand for an automobile to fall would be the rise in gas. When gas prices are high then people find other ways arrive at where, they are going. The improvement of technology can raise the supply and the demand in cars. If the manufacturers can find faster and better ways to make cars then they will be able to make more of them. Prices in supplies such as the metal or tires to manufacture the cars going up can decrease the supply of cars. Normally a substitute can be found for any product a person may choose to buy. One substitute for a car would be a bike. I have chosen to ride a bike to work rather than go buy a car because I did not have much money. Another substitute for a car would be public transportation. Many factors can cause people to prefer a substitute over the actual good. Gas prices, the cost of cars, unemployment, or the cost in repairs rising. When one product can go with another product to help complete it that is sometimes called a complement. Complements are products that tend to be consumed together. Think of movies and popcorn, or plywood and nails,...