Student Name

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1. What are the main factors or variables that determine consumers’ demand for the

good or service you have selected?

The cost of goods and services has changed over time. Hence, due to the price changes,

the Demand Curve shifts accordingly. From $12 to $16, there will be a drop in demand

from 80 to 60 customers

How important is the price?

Depending on the product, the price can have a greater or lesser impact. Besides, only a

small drop in demand occurs when the price of gasoline rises due to scarce, a scenario

regarded as inelastic demand. For example, if the price of Toyota automobiles rises,

consumers will instead purchase less expensive alternatives such as Nissan in a market

where demand is elastic).

Shifting The Demand Curve.

As a result of price discrimination, customers will purchase more or fewer items at the

same price, depending on their needs and wants. If demand conditions change, this will

occur.

Factors affecting demand

i. Income. As disposable income rises, so does the purchasing power of the average

person. Income growth can be attributed to a variety of factors, including a rise in

wages and lower taxes.

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ii. Credit eligibility. If taking out a loan to pay for an expensive item like a car or a

foreign vacation is made more convenient and less expensive, consumers may be

more likely to do so.

iii. Quality. If the quality of a digital camera has improved, for example, customers

are more likely to buy one. A well-placed ad campaign can help build customer

loyalty and boost sales. For example, Coca-increased Cola's advertising

expenditures have resulted in a rise in worldwide sales.

iv. Substitutes. The primary alternative to Samsung is Apple's iPhone, which will

gain in popularity if the price of Samsung phones rises.

v. Complements. A decrease in the price of complements will lead to an increase in

demand for them. If the Play Station 2 becomes more affordable, there will be an

increase in the number of people looking for compatible games.The colder

months are a good time to stock up on warm weather clothing and fuel.

vi. The economic cycle. During a recession, even if a person's income is stable, they

will cut back on spending. Their fear of losing their jobs has caused them to be

risk averse and cut back on their spending. An economic boom will lead to a rise

in consumer confidence, which will lead to an increase in the demand for

products.

vii. Wealth-effect. Wealthier households are more likely to spend money (e.g., house

prices rise). In part, it's because a remortgage or having more assets gives them a

sense of self-worth and a greater ability to take risks.

2. What are the factors or variables that determine the quantities that firms will

produce (for the good that you selected)? How does the market react to changes in
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these variables depending on whether there are many producers, a few, or a single

producer (perfect competition, oligopoly, or monopoly)?

Savings in the manufacturing process. Businesses can now produce more while

spending less because of this. Lower raw material costs and lower labor costs are the two

most likely causes of lower prices.

Substitutes products' profitability. Farmers may switch to growing crops for biofuels

on all of their fields, reducing the amount of wheat available for human consumption as a

result of rising biofuel prices.

Partners in the supply chain. Increased beef production is required to increase leather

supply (from cows).

Weather. In agriculture, weather has a significant impact since the pattern directly affect

the quantity of production.

Employees Welfare. If workers are more dedicated and driven, output and supply will

rise significantly.

Progress in the field of technological innovation. Computers and automation have a

positive impact on business.

Reduced taxes are needed. Cigarette taxes, for example, have an immediate impact on

the price of cigarettes.

Subsidies. The federal government's financial assistance. As the cost of train tickets falls

due to government subsidies, so does the cost of the ticket.

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ultimate objectives of a company Our supply may be reduced if businesses work together

to maximize profits. Despite the fact that a rise in supply is likely if they focus on

maximizing sales or revenue,

3. During the peak of the Covid-19 pandemic households reduced spending and
increased saving. As vaccination rollout increased and restrictions to movements
were eased, households resumed spending. How has the market for the good you
have selected been affected by this change in household behavior?
Additionally, there has been an increase in spending on services, the adoption of new
technologies like smartphones, and an increase in spending outside of the home due to
this epidemic. To see if the pandemic's impact on consumer spending would last,
researchers looked at nearly three-quarters of all consumer spending sectors.
E-grocery shopping and nesting (buying things like backyard gardens, home gyms, and
gaming equipment) have become increasingly popular over the past few years. Online
learning and virtual healthcare visits have also become more commonplace in the last few
decades.
We created a "stickiness test" based on case study results to figure out what factors
influence whether or not a behavior persists. Each of our case study behaviors was
examined in our sample of major economies from 2020 to 2024 to see how it would
perform.
Distance learning, declining leisure air travel, and declining live entertainment will return
to their pre-pandemic patterns, but e-grocery shopping and virtual healthcare visits are
predicted to persist.
We discovered two common threads in our investigation. Despite the COVID-19
pandemic, digital technology adoption continues to rise. After the pandemic, many high-
income families will prefer to work from home, while many low-income families will
stick to low-cost entertainment options like digital media. This is because of the disparity
in income. The pandemic and lockdowns triggered this "home nesting," which reversed a
long-term trend of people saving money and spending more time at home. Tourism,
education, and dining are all expected to resume as soon as the outbreak has been
contained. However, the pandemic's experience may lead to some adjustments.
4. Supply disruptions in intermediate inputs and final goods have occurred during the

pandemic-induced recession and during the recovery. To what extent and how have

these disruptions affected the market for the good you have selected?

Toyota is reducing production in North America and Japan as the coronavirus pandemic

spreads throughout Southeast Asia and beyond. A 45% reduction in domestic production

by Toyota, the country's largest automaker, was announced on Thursday. This affects 14
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auto assembly plants. In August, Toyota expects to reduce North American production by

70,000 to 100,500 vehicles. Depending on the month, Toyota's output can drop by 50-

70%, according to the company's representative. COVID-19 and other unexpected events

in our supply chain are affecting production at most Toyota North American plants, the

company said in a prepared statement on Thursday. Efforts have been made to minimize

the impact on production while the situation remains fluid and complex. North American

production cuts will have no effect on employment, according to the company.

In Japan, a wide range of models, including the Corolla, Prius, and Land Cruiser, will be

affected by partial and complete production shutdowns starting next month at various

plants. September's global production is expected to drop by 450,000 vehicles, according

to Toyota Motor Corporation's estimates. Coronavirus remains a threat, but the company

remains on track to produce 9.4 million vehicles this year. There were 320,000 vehicles

that were axed from Japan's production line; 80,000 were exported to the United States,

50,000 to Europe, 90,000 to China, and 9,000 to the rest of Asia (Ye et al., 2020). Toyota

had already announced a production reduction in Japan for July and August. Toyota

deeply regrets any inconvenience this may have caused our customers and suppliers as a

result of these changes. Moreover, automakers have been plagued by a shortage of

computer chips even after the outbreak appeared to be over. Toyota had been relatively

unscathed until now in comparison to other major automakers, but the rapid spread of the

delta variant has created new difficulties.

According to David Leggett, an automotive analyst with Global Data, the demand for

vehicles in Vietnam is currently decreasing. As the pandemic continues, it appears to be a

major setback for the auto industry's return to profitability. Toyota's profit for the first
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three months of the year was $8 billion, an increase of more than fivefold from the same

period in 2013.

5. Assess the extent to which the market for the good or service you have selected has

been affected by the lockdown and confinement during the peak of the pandemic?

Was there any substitution by other products and what caused that substitution if

that is the case? Has vaccination led to major changes in the market?

For the most part, switching from Toyota to a different brand is not difficult for

customers. These substitutes to Toyota products include public transportation, bicycles

and other modes of transportation. A famous automobile company, Hyundai motor

company is yet another top Toyota competitor. It is headquartered in South Korea. They

produce great products and services in the automobile sector and serve millions of

customers worldwide with their automobile service. They understand the value of having

a car and do everything they can to incorporate cutting-edge technology into the design

and manufacture of new cars. It is the 35th most valuable brand in the world. Hyundai's

vehicles are sold in nearly 193 countries, and the company employs about 85,000 people.

Their sales are supported by almost 6,000 showrooms and dealers (Ye et al., 2020). There

are about eight different car models in their line. Their cars come out with unique designs

coupled with technology. Hyundai is viewed as a serious threat to Toyota because of their

extensive knowledge and expertise in the automotive industry.

However, these substitutes are only moderately available. It is difficult to find

alternatives to Toyota's products in some areas, such as the suburbs, where public

transportation is in short supply. In addition, these substitutes are usually less convenient

than using the products of firms like Toyota. In this part of Toyota’s Five Forces analysis,
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the combination of such external factors in the automobile industry creates the moderate

threat of substitution that Toyota must address by making its products more accessible,

affordable and convenient.

6. If the good or service has been subject to demand or supply disruptions, do you

think that the government should impose a price ceiling? Is this the right policy in

all cases? Are there better alternative measures to help consumers? (illustrate

graphically)

I think that the government should introduce a price ceiling. Essentially, the cost of a

Toyota varies greatly depending on the model and line of the vehicle. Here, the

company's pricing strategy is laid out in all its glory. Toyota employs a variety of pricing

strategies, including the following:

 Pricing based on the market's requirements

 Pricing based on perceived value

Toyota bases its pricing on market conditions and the prices of competitors, a practice

known as "market-oriented pricing." Majorly, Toyota models, including cars and trucks,

follow this pricing strategy. Value-based pricing is also used by the company, which sets

prices based on the product's actual and perceived value. A value-based pricing strategy

is used for high-end products like the Prius and Lexus cars (Veluchamy, et al 2018).

Based on current market conditions and the perceptions of potential buyers, Toyota prices

its products accordingly.

Toyota employs a variety of communication methods in order to reach a wide audience.

This part of the marketing mix focuses on the company's strategies for interacting with its
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target market. In order of importance, Toyota engages in the following promotional

activities:

Selling goods or services on one's own initiative

Advertising

 The practice of managing others' perceptions of oneself

 public relations in support of an item or service

 Selling directly to the customer

Toyota employs salespeople at its dealerships to sell its products directly to customers.

Additionally, the company advertises on a variety of media platforms, including

television, print media, and the Internet. As a result, the company uses public relations to

promote its products, such as the Toyota Together Green program that promotes

environmental initiatives and the Meal Per Hour program that donates food to the Food

Bank (Ye et al., 2020).

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Equilibrium price Deadweight loss

Efficient Price

Ceiling

QS E QD

The ceiling price must be lower than the equilibrium price in order for the measure to be

effective. An increase in demand is caused by a decrease in supply; this change is known

as a price ceiling. Resulting in a shortfall of the amount Qd – Qs, In addition, the price

cap results in a loss of dead weight.

As a result of these public relations efforts, Toyota's brand image is enhanced. When it

comes to infrequent sales promotion, special offers are used. Direct selling is also used on

occasion by the business for corporate clients. This element of Toyota's marketing mix

shows that the business and its products are promoted in a comprehensive manner.

I think price ceiling is a right policy, Because of a price cap, a price cannot rise above a

certain level. If the price ceiling is lower than the equilibrium price, overconsumption and

shortages are likely. The price of a product cannot go too low if floor prices are in place.
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Excess supply, or surpluses, will occur if the price floor is higher than the equilibrium

rate. Setting a price floor or ceiling can have unintended consequences in a lot of

different situations.

7. The government levies a tax (sales tax or a value-added tax) on the good/service in

order to increase its own revenue. Illustrate graphically the introduction of the tax.

In setting the tax rate, should the government take into account the elasticities of

supply and demand and how? How will these elasticities affect the relative tax

burdens for consumers and producers? (Illustrate graphically).

When a tax is introduced in a market with an inelastic supply Toyota dealers have no

choice but to accept lower prices for their business. Taxes do not greatly affect the

equilibrium quantity. The tax burden in this case is on the sellers. If the supply were

elastic and sellers had the possibility of reorganizing their businesses to avoid supplying

the taxed good, the tax burden on the sellers would be much smaller, and the tax would

result in a much lower quantity sold instead of lower prices received. You can see the

relationship between tax incidence and elasticity of demand and supply represented

graphically below.
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8. To what extent do you think the good you have selected pollutes the environment?

Show graphically how that will result in differences between the cost to producers

and the social cost. What should the government do to induce firms to produce the

quantities that are “socially desirable”? Is a carbon tax the right policy?

Toyota is committed to minimizing the negative impact of its operations and products on

the environment. Green technology is something the company has been working on for a

very long time now. Since Toyota introduced the Prius, the world's first mass-produced

hybrid automobile, in 1997, more than 100 million metric tons of CO2 emissions have

been avoided. According to (Arsy, 2021), no single method can be used to create

environmentally friendly vehicles.

This is why our research is focused on developing plug-in hybrid electric vehicles, along

with fuel cell electric vehicles that are powered by batteries and hydrogen (FCEVs). The

company's goal is to have no negative impact on the environment at any point in a

vehicle's lifespan. Nearly all of Toyota's materials are minimized, recycled, reused, or

recovered as part of the company's life cycle management strategy. Therefore, to learn
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more about what we have done, what we are doing, and what we are planning, please

visit our website.

carbon tax

Governments may not want to use carbon taxes for a variety of reasons, one of which is

the impact they would have on welfare. As an illustration, the impact of a carbon tax on

fossil fuels is often regressive, harming the poor relative to the rich. Even if it appears to

be progressive, rising prices hurt the poor more than the wealthy because they increase

the cost of their food, clothing, and other necessities. It is not an easy task to come up

with a way to compensate them for this loss. Identifying those who have been harmed

and getting them compensation may be difficult because of inadequate compensation

systems.
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References

Zhao, M. (2022, March). Research for the Stock Performance of Toyota Industries Group

with Multiple Valuations. In 2022 7th International Conference on Financial

Innovation and Economic Development (ICFIED 2022) (pp. 2556-2561). Atlantis

Press.

Veluchamy, R., Sinha, K., & Sanghai, K. COMPARATIVE STUDY ON HR

PRACTICES IN AUTOMOTIVE COMPANIES DURING COVID-19.

Ye, M., Zheng, M., & Li, X. (2020). Price ceiling, market structure, and payout policies (No.

w28054). National Bureau of Economic Research.

Arsy, F. A. (2021). Demand Forecasting of Toyota Avanza Cars in Indonesia: Grey

Systems Approach. International Journal of Grey Systems, 1(1), 38-47.