Automotive Production Levels Research Paper Example | Topics and Well Written Essays - 1250 words

Automotive Production Levels - Research Paper ExampleThe metre demanded for Toyotas automobiles depends firstly on the price, but also on the consumer preferences, prices of other automobiles manufacturers, and income (Gravelle & Rees, 2004). As it sight be seen from the graph, where the semblance between quantity demanded and price is represented, a high price tends to reduce the quantity people demand, whereas a lower price tends to increase it.In what concerns the quantity produced, it is a function of the price, factors of production, e.g., capital, labor, technology, and number of competitors (Gravelle & Rees, 2004). As the graph presents, there is a direct relation between price and quantity produced so a higher price tends to increase the quantity produced, whereas a lower price tends to decrease it.The equilibrium price and quantity occurs when the quantity demanded and the quantity supplied are equal. On the graph, it is the point of intersection of Qd (quantity demande d) and Qs (quantity supplied). Solving the two equations for Qd and Qs we obtain the sideline equilibrium pointThe equilibrium point is above the current production level and price supercharged by the company, which are Q= 2236162 units and P=2.43 million yen. Taking into consideration that the level of production has increased compared with the cast of the previous year (as shown in Fig. 2), the management of Toyota should continue this trend of increasing the number of units produced in indian lodge to arrive at the equilibrium point.As it can be seen, this coefficient is higher than one so it can be said that demand for Toyotas vehicles is elastic. Taking this into account, management of the company should analyze many factors in the first place considering increasing the price of its products because the demand for the automobiles is very sensitive to price changes.Let us assume that the snap bean of demand calculated above