Eco 201 Final Project (Selected Topic Is Ford Motor Company)

The purpose of this project is to tie together the various topics in microeconomics that are discussed during the semester. The project involves an analysis of a particular product or service, a company that produces the product, the industry that produces the product, and an industry that produces a raw material or input used in the production of the product you choose to analyze. Choose any final good or service (no basic commodities, although this could come in the analysis of an input market). Use this as an opportunity to gain knowledge about the economics of a product or service that interests you.

a.) Draw and properly label the demand and supply graphs (this means you must label the axes and any lines you include on the graph).

Elasticity of demand is a measure of responsiveness to a price change of a good or service. When demand is elastic, the percentage of a price change of a product will result in a larger percentage of quantity demanded (McConnell, p 77). It basically means reducing the price of a good service will result in a greater quantity demanded and an increase in revenue for the seller. When demand is inelastic, a change in price will result in a reduction of quantity demanded, which will then lead to a revenue decrease (McConnell, p 77). To demonstrate elastic and inelastic demand results, Company A sells 100 pens at $1.00 a piece each day, making their revenue $100.00. Company A

These two sections should give you a great overview of the chapter. You will get a general preview of most of the vocabulary words. You will also get a preview of what to expect from each section of the chapter by reading the “key concepts and summary.” After you finished reading the “key terms and key concepts and summary”, I strongly recommend you review the graph of a demand/supply diagram. After you have reviewed the diagram, start reading the chapter. While you are reading the chapter, you should take notes. Some of the notes I took included elasticity is >1. For an elastic product price change causes a big change in quantity demanded. An example of an elastic product is restaurant meals. This is because there are many substitutes good; instead of a person going out to eat, can make a meal at home. Inelasticity is <1. For an inelastic product price change causes a small change in quantity demanded. An example of an inelastic product is gasoline. Inelastic products are essential and there are no substitutes. After you finished reading the chapter carefully and took some notes, you should finish off by copying down the formulas. I copied down the following formulas: price elasticity of demand formula, which is percent change in quantity demand divided by percent change in price;

A market demand analysis is used to help understand how much consumer demand there is for a given product or service. This type of analysis will help determine if a business can successfully enter a market and generate enough revenue and profit to maintain the business. One must identify the market and the growth potential.

If the price of graham crackers is $2.50 should firms raise or lower their prices if they want to increase revenue? Explain this in terms of elasticity.

For the past 24 years of my life I have been an employee of a company called Chrysler Financial which operated as the captive financial arm for an automobile manufacturing company known as Chrysler Group LLC (Chrysler Motors) until April of 2009. Chrysler Motors is one of the big three American automobile companies that manufactures several types of vehicles which are sold not only in the United States but also worldwide. The brands of vehicles Chrysler Motors manufactures are as follows: Chrysler, Dodge, Jeep and the recently added fourth brand for their truck line named the Ram. Aside from manufacturing vehicles, MOPAR, which is short for Motors and Parts, is the automobile parts,

1a. Elasticity in the economics can demonstrate the consumer’s response to the change in a commodity’s price or other conditions.

Price Elasticity of Demand is the theory of elasticity that focuses on the relationship between the price and the demand for a good or service. The study of how sensitive consumers are to a price change, is the study of Price Elasticity of Demand (Anderson). The idea is that when there is a change in the price of a good or service the demand will also change. In order to predict consumer behavior suppliers will study the consumer’s responsiveness to price change. Price Elasticity of Demand is measured by a difference in percent changes. The difference between the percent change in demand and the percent change in price (Anderson). If there is a larger respond in the amount demanded due to the price change the good or

b) How do you see the implications of Supply and Demand theory show up in your company’s strategies?

Discuss three different methods you used to determine that there is both a need as well as an existing global market for these products and/or services.

It is important to recognize that consumers will buy less of a product as its prices increases. It is also often important to know whether the increase will lead to a large or small reduction in the amount purchased. Economists have designed a tool called the price elasticity of demand to measure the sensitivity of amount purchased in response to a change in price. The equation for the price elasticity of demand is that the percentage of changes in the quantity of a product demanded by the percentage change in the price that caused the changed quantity. The price elasticity of demand indicates how responsive consumers are to a change in a product price (Gwartney).

4. An analysis of the industry, i.e., degree of competition, growth of industry-wide sales, profitability of competitors, life cycle stage of the industry, Porter’s five factors, and P/E ratios of competing companies.

In the modern economic system presented in the world today, microeconomics, and the study of such, is a vital part of the budding economic scholar. In most circumstances, microeconomics is based on the cumulative study of how individuals and firms, or a combination of the two, make decisions regarding the allocation of resources, typically in markets where goods and services are bought and sold. This allocation, or optimization of limited funds through distribution, usually follows 2 standardized theories: the Consumer and Producer. Consumers usually choose to maximize their available preference in the market, with a limited income value or time aspect. This is evident in the world economy, with consumers always being fiscally motivated

1.Detail and discuss alt the challenges you faced in projecting demand: meeting customer needs and wants, pricing, competitive actions and competitive response. How did your decisions impact your end performance (market share, income statement)?