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Economic R Us- Speedy Limo

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Economics R Us: Consulting Report for Speedy Limo
Demand and Supply Fluctuations: Speedy Limo has seen many different supply and demand fluctuations over the past few months. For quite some time the demand for the limo service increased and is seen by the shift to the right on the chart labeled Appendix A. This increase was due to the airport charging more for parking. A substantial amount of customers started using Speedy Limo’s service due to it being more cost effective with the increased parking rates. This demand shift continued until the recent economic issues. During this time of economic hardship, wages and gas prices were increased for Speedy Limo. This made the cost of providing the service to increase. Because of this, Speedy Limo had a decrease in the supply of their services. This can be seen in detail on the chart in Appendix B. Speedy Limo could consider raising their prices to bring the demand and supply back to equilibrium. This could help maintain these large swings in supply and demand.

There has been some discussion from the major taxi cabs in the area that they might lower prices. The demand for their service has been on the decline since the limo service has been taking some of their customers of late. Due to the suspected price drop, Speedy Limo has asked us to provide them an overview of how a price drop to these major companies would affect the company’s demand of its service. Appendix C shows the demand shift to the left showing the decrease in demand suspected if these companies do decrease their prices. This would not be good for Speedy Limo not only due to the decrease in the demand for their product, but also due to the increase in cost to provide their service.

Forecasting for Speedy Limo:

When selecting an appropriate forecast for a company one must consider the all parts of the company, have knowledge of

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