FREE ESSAY ON CARS - PRODUCTION, SELLING, MARKETING

CARS - PRODUCTION, SELLING, MARKETING

1. People looking to trade in their old car for money off of their new car become
discouraged with the low trade in value, and decide either not to buy a new car at all or
to buy a cheaper model. The lower car sales is a reduction in demand, because the
decrease in resale value of used cars is not changing the prices of the new cars, as a
change in quantity demanded would suggest, it is changing what people are willing to pay
for the cars. A graph of the new demand curve would actually be shifted to the left of
the old demand curve, because the price of new cars has not changed, but the number of
new cars being sold has changed.
2. Escalating consumer debt, higher interest rates, and slow growth in real income are
all making it difficult for consumers to purchase cars. These factors also are not
changing the price of cars, and so they are changes in demand, not quantity demanded. In
other words, these factors are shifting the entire demand curve to the left.
3. Ford and Toyota are making the price of buying a new car cheaper, hoping that more
people will want to purchase new cars. This is an attempt to change the quantity
demanded. Ford and Toyota are hoping that their efforts will move them downward on a
demand curve, hence more will people buy the less-expensive new cars. An advertising
campaign. If Toyota and Ford were to start a new advertising campaign, they would be
attempting to change the demand. With a new advertising campaign, the car companies are
hoping that the demand curve would shift back to the right and more people would buy the
cars they are making at a price that returns their profit to its original level. 
Answers to Use Your Economic Reasoning on pages 82 & 83
1. The U.S. has already mined most of its high-quality, accessible natural resource
deposits. Other countries still have many high-quality, accessible deposits of natural
resources. 
2. Technology is helping U.S. firms to lower costs, by increasing their productivity
while decreasing their human labor force. Using technology, the productivity of each
employee within the firm is very high. The pay role for employees is less simply, because
there are much fewer employees, but the profits of the company increase, because the
productivity increases. 
3. Technological advances in the mining industry are not changing the prices of the
products, but they are changing the amount of product produced. The coal industry wants
to sell more products at the same price, thereby moving the demand curve to the right.
This is a change in supply not in quantity supplied.
Answers to Use Your Economic Reasoning on pages 92 & 93
1. See Graphs at bottom of next page. As the demand was going up for students with
college degrees the supply was not able to keep up. More and more companies were willing
and able to pay for college educated people, but there were not enough college graduates
to go around. So the companies that got the college graduates were the ones who were
willing to pay the most money. These inflated the entire market of incomes for college
graduates, because the demand was so much greater than the supply.
2. Now we will find that the supply of college graduates is gradually catching up to the
demand for them. Unless the demand for college graduates continues to grow, as I suspect
and hope it will, we will reach an equilibrium were the only difference in pay between
high school and college graduates will be the cost of going to college. In this case, the
amount that people are willing to pay for a college graduate will not be as high because
there are a lot more college graduates in the market. The supply will also level out,
because high school students will no longer believe that it is to their advantage to go
to college, because the incentive is not that great.
Answers to 1, 2, & 7 of Problems and Question for Discussion on pages 104 & 105
1. To me a need is something that you literally can not live without. If you have the
ability to pay for a need, then you had better pay for it--needs are not really a choice.
Needs are not things we choose, needs are things that are existence as humans force upon
us. Clearly the girl who won't buy a shirt because she wouldn't want to use her allowance
money is not in need of that shirt. She has the ability to buy the shirt. She simply is
not willing to buy it with her own money. Shirts can be a need but they are not a need
when we choose something that we want (having an allowance savings) instead of something
that we need. Demand depends on both willingness and ability. If people are willing to
pay the going price for something and have the ability to do so, then demand tells them
that they can have it. Demand includes not just what people need to buy, but also what
people want to buy. Demand governs the bread market (bread being more of a need then a
want) and it governs the computer game market (computer games being to me a clear example
of a want and not a need.)
2. Unless Podunk College had just made a substantial increase in the cost of attending
it, the drop in enrollment has to be in the demand rather than the quantity demanded.
This means that for some reason the entire demand curve for Podunk College has shifted to
the left. The are many causes of such a shift. Maybe the student's in that area can no
longer afford to go to college at Podunk. Maybe Podunk has fallen out of favor with the
student's of that area, who would now prefer to go somewhere else. Perhaps, the prices of
other colleges near Podunk have not risen so much as Podunk's tuition, or maybe Podunk
can not offer the same amount of financial aid to students that they once could. Perhaps
the number of people who want to go to college has just dropped, because students no
longer believe that a college education is worth the cost. 
7. Clearly the people who enjoy tennis and can most afford to pay the fee are going to be
the most supportive of having a fee, because a fee will allow them to use the courts,
while keeping off the people who can not afford. Perhaps the people who live near the
tennis courts and don't like the crowds at the tennis courts would also support the fee.
The government would like a fee simply because they get to keep the revenue. And the
taxpayers might be in support of the fee, because the money raised from the tennis courts
might reduce taxes or be diverted to programs that would more benefit them. I suppose you
might say that the demand for the courts is high, but, since tennis courts are currently
publicly owned, there is nothing to reduce the demand for the courts. If tennis courts
were privately owned, than this particular court would have a fee to get in, and, as the
courts started to get over crowded, the fee would go up. Then, somebody else in town
might start to run a court of their own and the some people would go over there to play,
and then the competition between the two courts would keep them from over charging.