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Demand and supply
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Demand and supply
The article I have chosen for discussion is "Hyundai's car sales are affected by lower gas prices". The article indicates the price equilibrium and supply changed due to the demand for small cars. The sales fell four percent as demand is decreased for small cars like Accent and Elantra. Besides, a 5% increase in the demand was recorded for big vehicles like crossovers and trucks ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"sIpv2v3e","properties":{"formattedCitation":"(\\uc0\\u8220{}Hyundai falls 4% as small cars tumble,\\uc0\\u8221{} 2014)","plainCitation":"(“Hyundai falls 4% as small cars tumble,” 2014)","noteIndex":0},"citationItems":[{"id":1067,"uris":["http://zotero.org/users/local/mlRB1JqV/items/KHM32QTP"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/KHM32QTP"],"itemData":{"id":1067,"type":"webpage","title":"Hyundai falls 4% as small cars tumble","container-title":"Automotive News","abstract":"Hyundai Motor America's November sales fell 4 percent on weak demand for small cars such as the Elantra and Accent.","URL":"https://www.autonews.com/article/20141202/RETAIL01/312029993/hyundai-falls-4-as-small-cars-tumble","language":"en","issued":{"date-parts":[["2014",12,2]]},"accessed":{"date-parts":[["2019",9,6]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Hyundai falls 4% as small cars tumble,” 2014). The reason behind this change in demand for small and large cars is the lower gas prices which is $3 per gallon. Price and demand have a negative relationship due to which when the price of gas decreased the demand for big vehicle increased lead to changes in demand level. However, the supply curve did not change resulted in a loss for small cars but gain for big vehicle. People changed their preference from small cars to large one as they are now able to ride big vehicles in the same gas prices. This change in preference leads the Hyundai company to make more crossovers and trucks than small compact cars. Moreover, The decrease in the demand indicates the surplus of small cars models in the market that no one is buying. It shifted the price equilibrium lower than before. Therefore, the company should manage to increase the demand for those cars. In addition, the supply of large car should be increased to gain more profit. In other words, in the short-run company may face loss due to the already produced small compact cars, but if they manage to cope with the demand of the consumer they can make a profit over it in long term.
References
ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Hyundai falls 4% as small cars tumble. (2014, December 2). Retrieved September 6, 2019, from Automotive News website: https://www.autonews.com/article/20141202/RETAIL01/312029993/hyundai-falls-4-as-small-cars-tumble
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