Supply and Demand Essay

760 WordsMay 14, 20134 Pages
Shiva Nagireddy Commentary #1 Date Due: October 29th, 2012 Syllabus Section: Section 1; Microeconomics Pawan Munjal, October 25, 2012, Hero Motocorp posts 27% profit drop amid Honda's market push, Business Standart http://www.business-standard.com/india/news/hero-motocorp-posts-27-profit-drop-amid-hondas-market-push/490523/ Word Count; 709 The production of Hero MotoCorp merely depends on its consumers and its demand. The article states that Hero Motocorps' demand has declined 27% because of competition. Due to the decline, the price will increase and the quantity produced will be decreased. The decrease in the demand was mainly caused by the split from Honda, so it is suggested that all resources much be used efficiently. If product efficiency, which is resources being used in the best way possible, is not met at the economy will not produce a point on the Production possibilities curve. To shift the point on the PPC, Motocorp should increase the factor of productions such as labor, land, capital and entrepreneurship to increase new ways to use technology or develop new technology. The improvement in the resource quality can result in the economy producing more which causes the demand to increase. Demand is the amount of goods and services that people are willing to buy during a specified time frame, given the choices available. Change in buyers tastes, change in the number of buyers, price of other related foods, expectation of consumers and the change in income can all result in the increase or decrease of demand. Due to the competition, the demand decreasing might've been largely caused by the change in buyers tastes and the price of other related goods. Buying a car is a complementary good meaning that it is an "and" decision, if you buy the car, you have to also buy the gas in order to drive the car. This coudlve mainly affected suply because if

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