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Economy

I am looking for a serious OTA knowledgeable in this area of expertise.
If you are using any reference, please include citations.

As you think about this question bear in mind that we can fix or hold constant any of the variables in an economic situation the changes will be reflected in the other variables, we can hold price constant, such as is often attempted in prices controls, we can hold supply constant by imposing a quota and that will be reflected with a change in price, we can hold demand constant but rationing such as using coupons to purchase products and this was used during World War II. We can even hold rents constant as is done in many places, my home town of New York for example, with very poor results. So my caution to you is, think about what happens when government intervenes in markets.

This question is designed to improve your understanding of supply, demand and price, which are the topics of this first week. Read the material and explain your answers in economic terms.

Discussion Question
In 1981 the US Government threatened to impose quotas on the importation of Japanese autos. The Japanese agreed to limit imports voluntarily, which in effect was a quota. You may answer all or select any of the following.

Using the graph attached:
1. What would you expect to happen to the price of Japanese cars if the quantity imported was limited? (What price is equilibrium), (What is the quantity demanded at $9,000; $17,000)

2. What would you expect to happen to the price of American cars if the quantity of Japanese autos were limited? Would the prices rise, fall, unchanged? Why?

3. If you were a U S auto manufacturer would you be in favor of such quotas and why? Did the strategy work?

4. If you were a consumer would you be in favor and why? Have car prices declined since the early 1980's.

5. If you were a member of the UAW (look this up if you don't know who this is) would you be in favor and why? What happened to the number of union members since the imposition of these 'voluntary' quotas

Use the chart below to help you with your response. The chart is attached because OLS will not let me paste it into the question.

These discussions were taking place in 1981, the US auto industry was in deep trouble; the economic principles were well know at the time. It appears that economics has triumphed over politics as the US auto industry as continued to face the same problems they had in 1981. The average price of EVERY auto sold in the US both foreign and domestic has risen by approximately $3,500 because of the restrictions. Recently it has been announced that Toyota is the second largest auto manufacturer in the world 22 years after this temporary relief has gone into effect.

The graph is attached as a file; use it to support your answer.

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Discussion Question
In 1981 the US Government threatened to impose quotas on the importation of Japanese autos. The Japanese agreed to limit imports voluntarily, which in effect was a quota. You may answer all or select any of the following.

Using the graph attached:
1. What would you expect to happen to the price of Japanese cars if the quantity imported was limited? (What price is equilibrium), (What is the quantity demanded at $9,000; $17,000)
The equilibrium price is $9,000. At this price the quantity demanded will be 8 million cars. On the other hand if the quantity imported are limited whether by US government imposed quota or by self imposed quota, and the quota is 5 million cars, and the price will be $17,000. So, at $17,000 the quantity demanded is 5 million.
2. What would you expect to happen to the price of American cars if the quantity of Japanese autos were limited? Would the prices rise, fall, unchanged? Why?
If the quantity of the Japanese cars were ...

Solution Summary

This solution gives you a detailed discussion on Economy

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