Supply and Demand

Essay by ricky10ssUniversity, Bachelor'sA, October 2007

download word file, 1 pages 5.0

After reading this summary, the audience should be able to realize why the hybrid is in high demand, why car manufacturers are getting the asking price, and how supply and demand could affect the prices of hybrids in the near future.

SummaryThe demand for hybrid vehicles is significantly higher than the supply of the hybrids offered by car manufacturers (Gillette, 2005). The main appeal behind purchasing a hybrid is the rising cost of fuel. Hybrid sales are also increasing because of its appeal to diverse buyers, good resale value, and government tax break (Gillette, 2005). For example, consumers who want to purchase a Prius, a Toyota hybrid, must be placed on a waiting list and cannot even test drive the car because the cars are pre-ordered before the cars even arrive (Gillette, 2005).

The cost to buy a hybrid vehicle is at least $2,000 higher than buying a non-hybrid (Gillette, 2005).

In addition, the prices of the hybrids are not flexible due to the high demand and negotiations are absent. Therefore, supply and demand will both increase while consumers will pay more money to buy a hybrid. The article concludes that the hybrid is the car of the future and with gas prices increasing, the prediction is proving to be correct with more available hybrid models available to purchase.

ConclusionIn conclusion, the article offers information to the reader regarding the surplus demand, limited supply, and price of hybrids. As a result of high cost of gas, the amount of hybrids greatly exceeds the supply of hybrids. Consumers are prepared to pay more for a hybrid because of the low supply and the need to use alternate fuel. Car manufacturers are taking action to the high demand and increasing earnings by offering more...