A Case Study Group 7 Essays - Economics, Economy, Demand, Marketing

-95255694490 Course Code: ECON24 Course Title: Basic Microeconomics Instructor: Ma. May Nicel M. Zepeda Group Members: Culaban , Remi Ann Flojemon , Mia Ilagan , Mary Joy Sergio, Lizville Tenorio , Jayvee 0 Course Code: ECON24 Course Title: Basic Microeconomics Instructor: Ma. May Nicel M. Zepeda Group Members: Culaban , Remi Ann Flojemon , Mia Ilagan , Mary Joy Sergio, Lizville Tenorio , Jayvee A Case Study: Luxury Vehicles Decline 30% TIME CONTEXT January- March, First quarter of 2012 VIEWPOINT An official from one of the luxury car companies stated that the sales of the luxury car brands declines to 30% compared to the same period last year. STATEMENT OF THE PROBLEM The Bureau of Internal Revenue (BIR) will keep a close watch on buyers of luxury cars to determine if there are possible cases of tax evasion. Luxury cars offer more model but find fewer buyers. The campaign of the BIR affects the sales of luxury cars especially to those practical people. The answer on how to make equal changes between the price of luxury cars with or without taxes. OBJECTIVE The purpose of this study is to know the specific reason of decrease in sales of luxury cars. Also, to be aware of the effect on car companies and the consumer because of the BIR's campaign. RECOMMENDATION Luxury carmakers like BMW and Mercedes Benz have added a dizzying array of variations to their model lines, in hopes of attr acting buyers from rival brands, with this situation, I will recommend to negotiate with BIR together with other car companies and also having upgraded kind of promotion. CONCLUSION/DETAILED ACTION PLAN In this case, we have begun to see how these laws interact. Price controls and taxes are common in various markets in the economy and their effects are frequently debated in the press and among policy makers. The incidence of a tax depends on the price elasticity of supply and demand. Organize a meeting with other car company's representatives and talk about the negotiation with BIR giving opinions about having fixed amount of tax based on the needs of all the sectors (car companies, BIR, and the consumers). After this, car companies must innovate the kind of promotion by consistently providing flyers, pamphlets, newspapers or magazines of your own products (to give knowledge of the history and advantages of the car brand). Interaction and conversations with home owners of a target market place will also help. VII. QUESTIONS Is the demand for luxury cars elastic or inelastic? Luxury cars are elastic, based on the situation, it could be said that a decrease in income led to the decrease to the sale of luxury cars. Individuals no longer have much as much disposable income as before. Thus, individuals want to save more money in case something unexpected turns up. What factors influence the elasticity? Availability of substitute products could be one of the reasons why the demand for the luxury items decrease. Luxury cars are under the category Veblen goods which doesn't follow the law of demand. Second is the level of price. Also, population, proportion of income spent on the good, and preferences of consumers. Is specific tax a better alternative to raise tax revenue? Explain. Yes, because having specific tax gives the consumer trust in buying goods by knowing that their money is worth it giving equality to the needs of the consumer and also the revenue collectors and company owners. Specific tax gives the right if the consumer to budget their money and also to raise the tax revenue by consistently buying the same products.