Xecon 212 Week Two Assignment

Supply and Demand / Price Elasticity
Mike Brunnel
April 29, 2012
University of Phoenix

Supply and Demand / Price Elasticity
      Since I recently bought a new car, I decided to analyze supply and demand / price elasticity of the Ford Mustang. As I stated in previous assignments and discussion questions, I chose to purchase the 2012 Mustang GT over more economical choices. There was no rhyme or reason behind my purchase; I just bought it because I liked it, which shows my personal preference was the largest factor for my decision. My Mustang looks awesome, sounds great, drives really fast, and the most important factor of all, my girlfriend loves it. My decision to purchase the Mustang was a pure impulse buy; I was actually looking for a car that received, at least, 28 to 32 miles per gallon, great safety ratings, good annual percentage rate, and could fit my Girl friend and my two children. So with my recent purchase in mind, I will explain the factors that affect supply and demand and price elasticity of the Ford Mustang.
      There are many factors which affect the supply and demand of the Ford Mustang. The most important factors, for most people, are gas mileage and unemployment. With the rising costs of fuel, many people are looking for vehicles with great gas mileage and are steering clear of the muscle cars, SUVs and trucks. With the rising price of fuel, less people will want to purchase a new Mustang, which will cause Ford to reduce the supply of these vehicles produced. Even though the Mustang is considered a high quality vehicle, the average price of $27,000 coupled with an average of 26 miles per gallon of gasoline, proves a factor which lowers the sale of this vehicle. As I write this essay there is a commercial on TV, promoting the KIA as the best “bang for your buck”. These vehicles are producing an average of 30 miles per gallon and an average price tag of $15,000.
      When we look at the necessity of a vehicle, there are still...