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The Effect Fuel Prices Have on Car Manufacturers Essay

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Below is an essay on "The Effect Fuel Prices Have on Car Manufacturers" from Anti Essays, your source for research papers, essays, and term paper examples.

THE EFFECT FUEL PRICES HAVE ON CAR MANUFACTURERS


Abstract
The price of fuel has an absolute influence on car buyers. It has a similar influence on car manufacturers; in the fashion they find a way to reel in their next buyer. So what is it that we need to know to maximize our strategy as a car buyer? We need to closely examine the relationship that fuel prices have on car manufacturers. As a buyer, you can benefit the most when you can predict your opponent’s next move. In addition, you can make a more educated buying decision with knowledge of the relationship between varying fuel prices and car manufacturers.

THE EFFECT FUEL PRICES HAVE ON CAR MANUFACTURERS
Nearly one year ago, the average price of gasoline in the U.S was $3.38 per gallon.   Within 11 months, our new average cost per gallon of gas has plummeted to $2.30.   In the past, car manufacturers have been known to adjust their strategy for car production to adapt to consumer demand.   By examining the law of demand and the principles of elasticity, we can make an educated assumption as to how car manufacturers and car sales will react to a drop in fuel prices.

LAW OF DEMAND
The law of demand is an important aspect in this topic because it allows use to identify the demand of car sales with a reduction in fuel costs.   Once this is determined, we can predict the elasticity of the automobile sales market.   The law of demand states that as the price of a good increases, it’s consumer demand will decrease, and vice versa (refer to Figure A), (Investopedia 2014).   Lower fuel prices benefit the consumer region as it allows them to increase their expenditures due to the money saved each time filling up at the pump.   We also know that as a consumer’s income rises, so does that of their demand to buy goods.   In addition, automobile companies make an effort to adapt to the changes in fuel prices, as it is a variable that consumers take into consideration before buying a vehicle.   Before the fuel prices...

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MLA Citation

"The Effect Fuel Prices Have on Car Manufacturers". Anti Essays. 12 Dec. 2018

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APA Citation

The Effect Fuel Prices Have on Car Manufacturers. Anti Essays. Retrieved December 12, 2018, from the World Wide Web: http://trenmayamx.com/free-essays/The-Effect-Fuel-Prices-Have-On-728761.html