Is overproduction of in the auto market considered a market failure?
Alana M asked:
The demand for cars has fallen simultaneously as the production costs have increased. This has lead to many companies in the auto market being forced to lay off people.
Could this be considered a market failure as the free market has produced too much? And also, is this cyclical unemployment?
Thank you!
Related Blogs
- Related Blogs on Auto Market
- 2009 National Auto Market >> Sales of New Car dominates by …
- Tax Cuts Responsible for China's Auto Market Rise « ~ THE GUNNY "G …
- China overtakes US as world's biggest auto market | Recent Inside
- 2009 National Auto Market >> Sales of New Car close to 486K units
- China Overtakes U.S. To Become Worlds Biggest Auto Market in 2009
- Related Blogs on Cars
- Charging Electric Cars in a Solar Forest | Attuworld.com
- Disney Pixar Diecast CARS: Tomica Tokyo Mater | Take Five a Day
- Related Blogs on Cyclical Unemployment
- Today's Burning Issue: Unemployment
Possibly Related Posts:
- What are three reasons why Canada’s auto industry is important to the Canadian economy?
- Why are the american automobile companies important to the american economy?
- What percentage of the American economy does the auto industry make up? The airline industry?
- How has the us auto industry changed since EV1 release in 1996?
yeah it’s excess supply so price has to fall to meet demand and form a new equilibrium. Luke M
Whenever there is a case of oversupply, some people say “it was because there was too much regulation” on the other hand others say “there was too much regulation.”
To say anything definition about economics is hard because it is so driven – like religion – by ideology.
However the current over supply is not caused by a classic over supply situation. That is, where companies trying to get into the market end up competing for a market that isn’t any bigger. An example here is starbucks, which was openning in locations that basically took customers from other starbucks. Classic over supply.
However, the auto industry is fairly mature. Instead what happenned was another section of the market collapsed causing a fall in demand (rather than an oversupply). People have less money.
Boom and bust is part of the free market economy. So we are in bust cycle, causing increased unemployment (however, the current employment situation is caused by uncertainty, where businesses don’t hire because they are uncertain of their future, rather than decreased market size). flingebunt
no, it is because it is not owned on behalf of the people by the state, allowing the megacapitalist corporate elite to benefit from it financially while exploiting workers. then they pour the money into useless financial ventures and investments while rewarding CEOS and other exploiters. Then when the market tumbles and stock goes down, they rip off the investors and shareholders, take as much as they can for themselves and see to it the workers get the short end of the stick. the market economy needs socialism. Adams and Shovnovskja
No it’s not market failure, it’s simply changing markets and producers reacting to changing markets. Free market economics does not expect producers to accurately predict the future.
On the other hand the Chevy Aveo … THAT is an example of market failure. KevinStud99