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Supply and Demand Paper

In: Business and Management

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The good I have chosen for this supply and demand paper is buying a new car. I just bought a brand new 2012 Honda Accord LX from the Crystal lake, Illinois Honda dealer. I traded in my old 1999 Honda Accord EX which had 195000 miles on it. I had bought that car new as well from the Honda dealer. I was going to get my old car fixed but it would have cost me 2000.00 the Honda dealer said. They suggested I buy a new one and I was promised a good deal because sales were low for them. I made the decision to trade my old Honda Accord for 4000.00 and get the new one. I am so happy I made the right choice of buying a new car instead of throwing money away in the old one. In this paper I would like to talk about factors that could cause possible changes in the supply and demand when buying a new car. Determine at least two substitutes there may be for new cars. Also, check at least two complements there may be for new cars. Lastly, determine the key determinants of the price elasticity of demand. Some of the factors that could cause possible changes in supply and demand when buying a new car are when there are high unemployment rates and lower wages, the demand for new cars will be less. When people have a good job and make more than minimum wage they may buy a car for every driver in the house and then the demand for new cars will automatically increase. Also, when gas prices are really high people may avoid buying new cars especially since a lot of newer models have really big motors that eat a lot of gas compared to older vehicles. A lot of V6 these days have an impressive acceleration from 0-60 and do not eat as much as gas as a V8 but still uses a fairly larger amount of gas compared to the same older model of car the consumer may buy. Another thing that can increase supply is improvement in technology so that manufacturers can produce larger volumes of…...

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