Supply and Demand Paper
Monique Clement
XECO/212
Frederick Runge

When you are thinking about buying a new car there are some many things to think about including supply and demand. Understanding how supply and demand works can help you when it comes to purchasing a new car. You have to think about what make, model and year because those things will help you with elasticity and complements. The demand for a Bugatti is extremely low because this vehicle is unaffordable for most but the supply would be high because they only make a certain number of these cars per year and if you have the money you may want to sport this very fabulous vehicle.
A non-price factor that causes possible change supply and demand would be safety. Safety is a big concern to me when I am going to purchase a new car. I am looking for a great safety rating because I need a car that will protect me and children in case of an accident. Safety should be key for everyone when they are thinking about purchasing a new car. I like to do my research before stepping into a dealership. I also have to consider would safety be better on an SUV or car. Research is key to getting a safe vehicle. I remember when Kia car came out the safety rating was horrible. The cars were made cheap and it definitely showed. From 1997 to 2001 the Kia vehicles had a lot of engine and transmission problems so there was no demand for those vehicles because no one wanted to invest in a vehicle that would bring them problems.
Two substitutes for a car are to get a motorcycle or no car at all and depend on public transportation (bus and train pass), or sharing a ride with a friend or family. The thing about substitutes is that they are substitutes for what you want and so with that you have to decide if you can live with or without a new car. Having a family it is very hard to not to have a vehicle because when you have to go grocery shopping you have nowhere to store your groceries or you have to depend on a ride. You will have to decide whether a car is right for you or if you able to live with a motorcycle instead because it may be a little cheaper.
Complements for a new car would be gasoline, maintenance and/or insurance. It is extremely important to have gasoline for your new vehicle because without it you will not be able to go anywhere so that is a financial cost that you will have to account for. Depending what kind of vehicle you buy you may be paying more or less for gasoline. The prices have been going up and down for the last couple of years so it is hard to track how much you will spend. Another complement that you will be responsible for with a new vehicle would be insurance because you have to make sure that if you are in an accident or there was a flood your vehicle would be covered and you will not have to paying for the damages out of your own pocket which will be very expensive, so insurance is an investment that is required when purchasing a new car and it has to be maintained per most state law.
Cars are consumer durables, which are goods that last a long time. In the short-run consumers are more responsive to price change. In the short-run the demand for cars are elastic. Consumers are less likely to buy another car until their car wears out in the long-run, in which case buying a new car would become a necessity. In the long-run the demand for cars are inelastic. Another way to help with elasticity is make shorter trips because you are less likely to use a lot of gasoline which will help with your vehicle maintenance so you will more likely to have the vehicle longer. The same if you are living closer to work if the less drive to be done.
In conclusion, things like the time of year, price of gas, hybrids and taxes are things to consider with supply and demand when deciding to purchase a new car. Research before is very helpful because it can sometimes work out your favor because if the inventory is lower that mean that the demand is higher and if the supply is plenty that means that you can get a great deal.