BMW Automobiles. BMW Demand and Supply Coursework

BMW Automobiles. BMW Demand and Supply - Coursework Example Microeconomic Analysis Demand is the willingness and the ability of consumers to buy a certain product for a certain price at a particular period. While other factors are held constant, the prices of goods and services increase as its demand increases and vice versa. Supply is the willingness of the manufacturer or the company producing then goods or services to sell the products at a given price at a given period. While other factors are held constant, the supply of goods and services will increase at an increase in price. Various demand and supply factors affect the production and sale of BMW 3 series vehicles (Flaschel, 2010, p.1). The first factor is affecting BMW’s demand and supply is consumer taste and preference. Different consumers have a varied taste and preference for the product. BMW 3 series is a mid-level luxury performance sedan. The car is also a bench marker in the market. It has played a great role in influencing the competitor’s in trying to achieve i ts class. The consumers also have their taste, which varies with the individual. The taste and preference of this car by some individual consumers is predominantly affected by its price in the market, the performance both on road and on off roads modes, the cars ability to perform, and the fuel consumption. The BMW 3 series has a relatively high fuel consumption capacity as compared to its competitors and it is better in performance than its competitors are. Secondly, consumer income affects the demand of the BMW 3 series. Consumer income is the amount that the consumer has which they are willing to invest on that commodity. The BMW 3 series retail price varies depending with the model. The lowest price for the BMW 3 series is $32,400. This price may not be affordable to many consumers. The consumer income is the greatest determiner of the demand for this product both in America and outside the American market (Flaschel, 2010, p.1). Additionally, price of substitutes and other compl ementary vehicles affects the demand of the BMW 3series cars. BMW, being a luxury mid-level vehicle, has many substitutes and complementary vehicles. An example of these substitutes is the Audi A3, Infiniti G35, Cadillac CTS, and the Acura TL. These substitutes have a relatively low price and perform equally with the BMW 3 series. The availability of these substitutes has greatly affected the consumers’ decision in determining the best car available for them. The availability of these substitutes also influences the ability of the consumer to save in comparison to what they would have used if they purchased the BMW 3series. Additionally, the BMW 3 series has been affected by the complementary goods. Complementary goods are the goods that are used alongside the product. The BMW 3 series is a relatively high consumer if gasoline in comparison to its competitors. This has hugely influenced the demand of this car (Hortacs, et al, 2010, p.1). The forth factor that has influenced t he demand of this car is the consumer expectations. The BMW 3 series car has largely met the consumers’ expectations. BMW is actually an envy of many people, which has also increased the demand of this vehicle. The BMW 3 series is a great performer both on road and on off road modes. This has enabled it to have an innovative over the others in the market. The BMW also produces high quality vehicles that are not prone to damages as compared to it