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Eco/360 Article Analysis: The Supply And Demand Of Hybrid Vehicles

712 words - 3 pages

Article Analysis: The Supply andDemand of Hybrid VehiclesThe purpose of this paper is to summarize the article, "Hybrid vehicles hot in state, but supply is limited" and explain why changes occurred in supply, demand, and price. After reading this paper, the audience should be able to understand why the hybrid is in high demand, why car manufacturers are receiving the asking price, and how supply and demand may affect the prices of hybrids in the near future. For the purpose of clarity, the article defines a hybrid as a vehicle that can alternatively operate with either gasoline or an alternate fuel such as an electric battery.DiscussionSummaryAccording to Gillete, the demand for hybrid vehicles is considerably higher than the supply of the hybrids offered by manufacturers. The primary drive behind the purchase of a hybrid lies with the ever-increasing cost of fuel. However, the hybrid sales are also increasing due to its appeal to a variety of buyers, good resale value, and a tax break. Customers who want to purchase a Prius, a popular Toyota hybrid, must be placed on a waiting list and cannot even test drive the model because the models are pre-sold before the cars even arrive at the lot. As more companies introduce hybrid models, the demand for the hybrids is expected to grow.The price of the hybrid vehicles is at least $2,000 higher than the price of non-hybrids. Additionally, the prices of the vehicles are not flexible due to the high demand and negotiations are non-existent. Thus, supply and demand will simultaneously increase while customers will pay more out-of-pocket to own a hybrid. The article concludes that the hybrid is the car of the future and with gas prices on the rise, the prediction could prove to be correct.Changes in demand/supplySoaring gasoline prices, a shift factor of demand, resulted in rising consumer interest in hybrid vehicles and ultimately increased demand for hybrids. Since the hybrids were relatively new to the market, manufacturers only released a limited supply. Thus, the quantity demanded for hybrid vehicles exceeded the supply of hybrids and created a market that was not in equilibrium. In response to the excess supply, various...

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