Supply and Demand
Introduction.
Toyota Motor Company is one of the largest Japanese automotive manufacturers of the world. Due to the earthquake and tsunami in 2011 Japanese economy is facing recession. This report discusses an impact of this natural disaster to the Toyota company. Also, the paper explains non-price determinants of demand and supply and price elasticity of demand for Toyota vehicles. Moreover, economic models are used for making the report clearer and more understandable.
Section A. Description of the good (non-price determinants of demand and supply)
1. Determining the type of good is important in order to know the demand for good is elastic or inelastic. There are three types of goods in market: inferior, normal, and luxurious. Toyota vehicles are considered as number one car manufacturing company. The vehicles of Toyota are known for high quality and good demand. However, Japanese economy now facing recession. Consequently, it can be said that these cars are luxurious. According to D. Begg ‘recession is a period of general economic decline and it is typically accompanied by an increase in unemployment and other negative factors’. These negative factors will affect demand of Toyota vehicles negatively as people will have less money as a cause of inflation, unemployment and overall economic decline. The figure 1.1 below shows change in demand. ‘It is assumed that none of the determinants of demand, other than price, changes’( Sloman, 2003) In case of Toyota one of the determinants of demand people’s income cuase of recession falls, the curve is shifted to the left. That means that at each price less will be demanded then before.
[pic]
2. Due to earthquake and tsunami in 2011 in Japan the production of cars has been stopped as factories had been damaged and cars for export also had been damaged as a result earthquake.
Electricity shortage after nuclear disaster also caused shortage in
Toyota Motor Company is one of the largest Japanese automotive manufacturers of the world. Due to the earthquake and tsunami in 2011 Japanese economy is facing recession. This report discusses an impact of this natural disaster to the Toyota company. Also, the paper explains non-price determinants of demand and supply and price elasticity of demand for Toyota vehicles. Moreover, economic models are used for making the report clearer and more understandable.
Section A. Description of the good (non-price determinants of demand and supply)
1. Determining the type of good is important in order to know the demand for good is elastic or inelastic. There are three types of goods in market: inferior, normal, and luxurious. Toyota vehicles are considered as number one car manufacturing company. The vehicles of Toyota are known for high quality and good demand. However, Japanese economy now facing recession. Consequently, it can be said that these cars are luxurious. According to D. Begg ‘recession is a period of general economic decline and it is typically accompanied by an increase in unemployment and other negative factors’. These negative factors will affect demand of Toyota vehicles negatively as people will have less money as a cause of inflation, unemployment and overall economic decline. The figure 1.1 below shows change in demand. ‘It is assumed that none of the determinants of demand, other than price, changes’( Sloman, 2003) In case of Toyota one of the determinants of demand people’s income cuase of recession falls, the curve is shifted to the left. That means that at each price less will be demanded then before.
[pic]
2. Due to earthquake and tsunami in 2011 in Japan the production of cars has been stopped as factories had been damaged and cars for export also had been damaged as a result earthquake.
Electricity shortage after nuclear disaster also caused shortage in
Bibliography: A. Alain. Economics AS Level. Ormskirk, Lancs: The Alden Press, 2000 Begg D., Fischer S., Dornbusch R Christopher Johnson, (2011), Japan’s long road to economic recovery, The Globe and Mail G. Ilie (2011)., THE EFFECTS OF THE NATURAL DISASTER ON JAPAN’S ECONOMY AND FEW MEASURES TO ECONOMIC RECOVERY [pdf] Sloman J