Friday, June 10, 2016

The article below does a nice job describing the effect of increased demand for SUVs on Subaru dealers, with one exception. It confuses "scarcity" with "shortage". The questions continue to make the error. Boo!

TOPICS: Supply and Demand
SUMMARY: As retail demand for light vehicles softens in the U.S., Subaru dealers are confronting a problem unusual for most: scarcity. Limited production of its small SUVs are keeping customer waiting lists long.
CLASSROOM APPLICATION: Students can learn about the reasons for the scarcity of Subarus, and examine the effects of Subaru's limited supply of automobiles. Advanced students can discuss whether production capacities are important strategic variables in the competition among automobile manufacturers.
QUESTIONS: 
1. (Introductory) What factors are causing the scarcity of Subarus?

2. (Advanced) What is the effect of the scarcity of Subarus on the prices of the automobiles?

3. (Introductory) What is the view of Subaru dealers about the limited supply of Subarus?

4. (Advanced) Are production capacities are important strategic variables in the competition among automobile manufacturers?
Reviewed By: James Dearden, Lehigh University

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