It Is Important That You Are Able To Apply Demand And Supply

It Is Important That You Are Able To Apply Demand And Supply Analysis

It is important that you are able to apply demand and supply analysis to events that you experience or read about in your life. Find an article from a newspaper or periodical that illustrates a market. Complete the following steps: Underline one sentence (market) to be analyzed (the article may discuss several markets). Identify the good or service. Discuss the relevant prices and quantities for the current market situation and identify what you believe is the equilibrium price and quantity. Discuss any shifts that have taken place in the supply or demand curves. Make certain that movements along a curve are not confused with shifts in the curves themselves. Complete a one page analysis of your article. The answer should be concise and the market you are analyzing should be clearly stated at the top of the page. Be sure to include a proper APA citation and references for your article.

Paper For Above instruction

Market Analysis of the U.S. Used Car Market During the 2023 Price Surge

In recent times, the used car market in the United States has experienced significant fluctuations, driven by various economic factors. Analyzing a recent article from The Wall Street Journal (Johnson, 2023), it is evident that the market for used automobiles has been heavily influenced by shifts in both demand and supply dynamics. The article highlights how shortages in new vehicle production, stemming from supply chain disruptions, have increased the demand for used cars, leading to higher prices and altering market equilibrium.

The specific market under analysis concerns used cars, particularly used sedans and SUVs. Currently, the relevant prices for used cars have risen markedly, with median prices reaching approximately $28,000, up about 20% from the previous year (Johnson, 2023). The quantity of used vehicles sold decreased initially during the pandemic but has rebounded with increased demand, estimated at around 3 million units sold monthly in 2023. Based on these figures, the equilibrium price appears to have shifted upward due to increased demand and restricted supply. The current market situation suggests a new equilibrium where the price is higher, and the quantity exchanged stabilizes at a higher price point, reflecting market adaptations to recent shocks.

The demand curve for used cars has shifted rightward, primarily due to consumers' increased need for personal transportation amid recent supply chain issues affecting new vehicle production. During the pandemic, demand declined temporarily but has since surged as consumers prefer used cars over new ones, especially considering the rising costs of new vehicles and delays in manufacturing. This rightward demand shift is evidenced by the increased prices and higher sales volume at elevated prices.

Simultaneously, the supply curve for used cars has experienced a leftward shift, exemplifying a decrease in available used vehicles. This shift stems from a decline in trade-ins and the limited inflow of used vehicles from rental agencies and lease returns, compounded by reduced car accidents during COVID-19, which otherwise would contribute to higher supply. Consequently, the supply curve moving leftward has caused further price increases and lower quantities available at previous price levels.

It's important to distinguish these shifts from movements along the curves—while movement along the demand curve would occur if prices change due to existing demand at a constant curve, the rightward shift in demand and leftward shift in supply indicate fundamental changes in the market conditions. As a result, the market has moved to a new equilibrium point characterized by higher prices and a different quantity traded.

Overall, the 2023 used car market demonstrates how external shocks and demand-supply dynamics interact to influence prices and quantities. The shifts in the supply and demand curves reflect the market's adaptation to pandemic-related disruptions and changing consumer preferences, illustrating the importance of demand and supply analysis in understanding real-world economic events.

References

• Johnson, R. (2023). Used Car Prices Soar as Supply Chain Disruptions Persist. The Wall Street Journal. https://www.wsj.com/articles/used-car-prices-surge-2023
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