Power Project Plan Make a Microeconomic Analysis

¶ … Power Project Plan make a microeconomic analysis automobile industry. Project: Will Power price According resources availed countries, explicate price variation products services relation automobile industry special reference car industry.

Power Project Plan

Price in the automobile industry

In most products and services, variations in demand are indirectly correlated with variations in price, and vice versa. For instance, in the scenario of an increasing demand for the product X, it is expected that the same product supply be less able to serve the entire need. In order to regulate the demand then, the product would be retailed at a higher price. Vice versa, when the demand for an item decreases, it is expected that its retail price suffers a reduction in order to stimulate the demand.

Within the automobile industry, prices play an essential role in shaping the demand for the automobiles and the adherent accessories and services. And the most relevant example in this sense is offered by the internationalized economic crisis. Before 2008, the automobile industry was flourishing and nearly all families in the United States owned at least one car. But the real estate sector and the credit sector crushed and generated a series of chain reactions.

Access to borrowed funds became tighter and this impacted primarily the field of large household purchases. The automobile industry took a serious hit and faced an increasing inability of the population to access funds (CBS News, 2008). In other words, in the context of the crisis, the population found the price of the automobiles too high and did not afford to pay it. This situation was first present within the United States, where the crisis first emerged, but it soon expanded throughout the rest of the world. Gradually, consumers across the world grew more dependent on prices, to as such indicate the great power of price in shaping sales and consumer behavior in the industry.

But before the international crisis emerged, another important price issue was manifested within the United States. This referred to the loss of industry supremacy Ford suffered in favor of Japanese manufacturers, mainly Toyota. For decades, the American population had been accustomed to driving large size vehicles and enjoying the comfort those vehicles created for the users. And the support of this life and driving style was ensured by the low prices of oil in the country.

By the turn of the twentieth century however, the prices of oil and natural gas commenced to fluctuate and this was sensed in the price of gas within the United States. Gradually, consumers turned to more cost effective solutions, namely to vehicles which consumed less fuel. The American producers did not notice this shift in consumer demands, but it was seized by the Japanese manufacturers (Economist's View, 2006). In other words, the success of the automobile makers is sensitive to not only the price of the car itself, but also the price of maintenance of the vehicle.