Monday, September 12, 2016

Supply and demand in action in the Prius market

TOPICS: Supply and Demand
SUMMARY: Toyota's Prius is topping the sales charts in Japan but is struggling in the U.S. as relatively cheap gasoline prices dent the car maker's efforts to present itself as the leader of an environmentally-friendly future.
CLASSROOM APPLICATION: Students can examine factors that affect the demand for the Toyota Prius. In doing so, they can evaluate the effect of the success of the Prius on the number and type of competitive products.
QUESTIONS: 
1. (Advanced) Is gasoline an economic substitute of hybrid and electric cars? What is the relationship between the price of the gasoline and the demand for hybrids and electric cars?

2. (Introductory) Why do hybrids sell well in Japan?

3. (Advanced) Interpret the statement "Toyota's Prius is partly a victim of its own success."

Reviewed By: James Dearden, Lehigh University

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