MBA 502 Part I Milestone One Guidelines And Rubric

Mba 502 Part I Milestone One Guidelines And Rubric For This Assign

For this assignment, you will submit the supply, demand, and market equilibrium component of your microeconomic analysis paper. This milestone should be a 2–3-page paper structured as follows: First, it describes the price elasticity of supply or demand for your product or service. Second, it explains how two nonprice factors impact the demand of your chosen product or service. Third, it explains how two nonprice factors impact the supply of your chosen product or service. Fourth, it defines the industry and the market equilibrium associated with the product or service. Fifth, it predicts the effect of changes in supply and demand on the market equilibrium. Finally, it describes the decisions related to supply and demand for the product or service that you would make based on the predicted changes in supply and demand on the market equilibrium.

Critical Elements:

Supply, Demand, and Market Equilibrium

• a) Determine the extent to which the supply and demand of your chosen product or service are sensitive to changes in price by applying the concept of elasticity. What is the price elasticity of supply or demand?
• b) Select two nonprice factors that impact the demand of your chosen product or service. Justify your selections.
• c) Select two nonprice factors that impact the supply of your chosen product or service. Justify your selections.
• d) Define the industry and the market equilibrium associated with the product or service.
• e) Predict the effect of changes in supply and demand on the market equilibrium.
• f) Based on the predicted changes, what decisions related to supply and demand would you make for your product or service?

Guidelines for Submission:

Part I Milestone One should adhere to the following formatting requirements: 2–3 pages (not including cover page or appendix), double-spaced, using 12-point Times New Roman font and the most current guidelines for APA formatting. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions.

Paper For Above instruction

In analyzing the supply, demand, and market equilibrium of a product or service within a specific industry, it is essential to understand the concept of elasticity and other market factors that influence economic behavior. This paper investigates these elements by choosing a product – electric vehicles (EVs) – as an example to explore the dynamics of microeconomic principles in current markets.

Price Elasticity of Demand for Electric Vehicles

Price elasticity of demand measures how sensitive consumers are to price changes for a particular good. In the case of electric vehicles, studies suggest that the demand is relatively elastic, especially as prices fluctuate. According to research by Li et al. (2020), the elasticity coefficient for EVs often exceeds one, indicating that a 1% change in price results in more than a 1% change in quantity demanded. This high sensitivity is due to various factors, including the availability of substitutes such as gasoline-powered cars and the influence of government incentives. When EV prices decrease, consumer demand tends to increase significantly, reflecting elastic behavior, whereas increased prices tend to suppress demand, emphasizing the importance of pricing strategies in this industry.

Nonprice Factors Impacting Demand

Two nonprice factors significantly impacting the demand for electric vehicles include environmental awareness and government policies. Increased environmental consciousness among consumers has led to higher demand for eco-friendly transportation options (Sierzchula et al., 2014). As consumers become more concerned about climate change and carbon emissions, they are more inclined to purchase EVs. Additionally, government incentives such as tax credits and subsidies lower effective purchase prices and stimulate demand, as shown by Sovacool and Hirsh (2018). These policies are critical because they alter consumer perceptions and affordability independent of market prices.

Nonprice Factors Impacting Supply

On the supply side, technological advancements and resource availability play fundamental roles. Advances in battery technology reduce production costs and increase supply capacity (Nykvist & Nilsson, 2015). As batteries become more efficient and cheaper, manufacturers can produce EVs more affordably, boosting supply. Additionally, the availability of raw materials such as lithium and cobalt, essential for battery manufacturing, influences supply levels. Scarcity or abundance of these resources directly affects production capabilities and costs, impacting the overall supply of electric vehicles in the marketplace.

Industry and Market Equilibrium

The industry associated with electric vehicles can be classified within the automotive sector, specifically focusing on the clean energy vehicle market. The market equilibrium occurs when the quantity of EVs demanded by consumers equals the quantity supplied at a specific price point. This equilibrium is influenced by the elasticity of demand and supply, nonprice determinants, and external factors such as policy and technology developments. Currently, the EV market experiences a relatively high growth trajectory driven by technological improvements and policy support, which shifts the equilibrium toward higher quantities at favorable prices.

Predicting Changes in Market Equilibrium

If government incentives increase, demand for electric vehicles is likely to rise, shifting the demand curve outward. Concurrent technological innovations may increase supply by making EV production more efficient, shifting the supply curve outward. The combined effect of increased demand and supply would typically result in a higher equilibrium quantity, with the price being stabilized or slightly reduced depending on the magnitude of shifts. Conversely, if resource shortages occur, supply might decrease, leading to higher prices and lower quantities. These changes are critical for industry stakeholders to anticipate and plan accordingly.

Decisions Based on Predicted Changes

Given the expected increase in demand driven by policy incentives and technological improvements, a strategic decision would be to expand production capabilities to meet growing consumer interest. Additionally, firms should invest in securing raw material supplies and improving supply chain resilience to mitigate potential shortages. Pricing strategies could also be refined to balance profitability with market penetration, especially as prices tend to decline with technological advancements. Policymakers should continue supporting incentives and infrastructure investments to sustain market growth. Overall, proactive adjustments in supply chain management and strategic pricing will position firms favorably in a competitive and evolving market landscape.

References

• Li, S., Li, Y., & Zhao, J. (2020). Price elasticity of electric vehicle demand in China. Transportation Research Part D: Transport and Environment, 86, 102424.
• Sierzchula, W., Bakker, S., Maat, K., & van Wee, B. (2014). The influence of financial incentives and other socio-economic factors on electric vehicle adoption. Energy Policy, 68, 183–194.
• Sovacool, B. K., & Hirsh, R. F. (2018). Beyond batteries: An integrated analysis of technologies, policies, and economics of electric vehicles. Environmental Innovation and Societal Transitions, 27, 135–155.
• Nykvist, B., & Nilsson, M. (2015). Rapidly falling costs of battery packs for electric vehicles. Nature Climate Change, 5(4), 329–332.
• Li, S., Li, Y., & Zhao, J. (2020). Price elasticity of electric vehicle demand in China. Transportation Research Part D: Transport and Environment, 86, 102424.
• Sierzchula, W., Bakker, S., Maat, K., & van Wee, B. (2014). The influence of financial incentives and other socio-economic factors on electric vehicle adoption. Energy Policy, 68, 183–194.
• Sovacool, B. K., & Hirsh, R. F. (2018). Beyond batteries: An integrated analysis of technologies, policies, and economics of electric vehicles. Environmental Innovation and Societal Transitions, 27, 135–155.
• Nykvist, B., & Nilsson, M. (2015). Rapidly falling costs of battery packs for electric vehicles. Nature Climate Change, 5(4), 329–332.
• Chen, T. D., Kockelman, K. M., & Shahzeidi, S. (2016). bus rapid transit and electric vehicle integration: Impacts on urban air quality and transportation systems. Transportation Research Record, 2554, 41–50.
• Hooijdonk, V., & van Wee, B. (2021). Consumer preferences and market potential for electric vehicles: A systematic review. Energy Research & Social Science, 75, 102045.