Term Paper on "Germany's Car Industry"

Quoted Instructions for "Germany's Car Industry" Assignment:

Here is the article from "The Economist" that I chose for this essay. Please follow the link:

Germany's car industry: The big-car problem. Germany produces some of the

fastest and most luxurious cars in the world, but is that yesterday's game?

Feb 22nd 2007, From The Economist print edition,

http://www.economist.com/business/displaystory.cfm?story_id=8738865 : Automobile

market: Shift left in supply curve due to higher environmental taxes/penalties,

shift right in supply curve due to outsourcing to Eastern Europe (possible

further shift right in supply curve as components manufacturing migrates to

Eastern Europe), change in tastes/shifting demand curve towards fuel

efficient/budget/alternative fuels vehicles.

1) Write an abstract of the article that highlights points of interest regarding the market or industry, such as changes that have taken place or changes that are expected to take place (i.e, put the article to the *****So What?***** test *****“ why do we care, what is of interest?). If you are going to emphasize just one portion of a longer article (perfectly acceptable), please state which section of the article you are going to focus on and why.

2) Describe how things have changed or are expected to change in the market, using microeconomic theory. That is, use supply and/or demand curves (or equations), show changing equilibrium prices or cost curves, or use any other theory that we have covered in the class. Keep it simple! It is okay to stick to simple supply and demand.

3) The essay should be 2 to 5 pages, double spaced: text should be typed/word processed but graphs and equations can be hand drawn. You should include at least two graphs, complete with graph titles and axes labels. You must also submit a copy of your article with the essay.

Your Economist.com essay should contain:

a. An introductory paragraph: Include the article name and summary statement about what market or business condition has caused the author to write about the market/business developments. Or, include the article name and a summary statement explaining what about the industry, market or company caused you to take an interest in the article. If you are going to emphasize just one portion of a longer article (perfectly acceptable), please state in the first paragraph which section/topic of the full article you are going to focus on and why.

b. In the paragraphs that follow the introductory paragraph, summarize market/industry/company conditions with a graph, equation or analysis. You must use economic theory: topics include, for example, the value of the firm; supply, demand and total revenue analysis; production cost analysis, elasticity of demand. With additional graphs (or equations or analysis), you should summarize changes/forecasts outlined in the article, or illustrate your own thoughts on future trends. Describe how things have changed or are expected to change in the market, using microeconomic theory. You should include at least two graphs (or equations or other type of microeconomic analysis).

c. Your closing paragraph should summarize what you have learned or any conclusions you*****ve reached from reading and analyzing the article, or state what you think future developments in the market/industry/company could be.

The essay should be 2 to 5 pages, double-spaced. Text should be typed/word processed but graphs and equations can be hand drawn. All graphs should have titles, and both axes and curves should be labeled. Include the graphs in the body of the essay (rather than as appendices). Captions next to the graph are highly recommended. Graphs should be included in the body of the essay rather than as appendices to your essay. You must also turn in a copy of your article with your essay.

The essay is graded as follows:

a. 25 points for turning the essay in on time.

b. 25 point for writing a well organized essay that is easily understood and has few spelling and grammatical errors.

c. 25 points for your first graph, properly labeled and correctly drawn (i.e., economic theory is applied properly to conditions discussed in the article).

d. 25 points for your second graph, properly labeled and correctly drawn.

Lastly, here is the Checklist for Microeconomics Essay based on Economist.com article. Please check off what applies from the article:

____ Profit Maximization:

____ Sales or production increases.

____ Purchase of other companies to increase sales/market access.

____ Decreasing sales or cutting back production.

____ Divesting/selling off subsidiary companies or product lines

____ Cost cutting

____Shifts/changes in supply

____ increase or decrease in the number of firms.

____ increase or decrease in input costs.

____ increase or decrease in price of related/alternate goods or services.

____ increase or decrease in capacity or supply due to weather/disaster.

____ increase in taxes or government fees.

____ changes in technology.

____ changes in quantity supplied (movement along supply curve).

____ changes in production input combinations.

____ Shifts/changes in demand

____ shifts in tastes towards or away from a good or service.

____ change in price of substitutes or complementary goods.

____ increase or decrease in income and/or wealth.

____ expected future price increase or decrease for the good or service.

____ increase or decrease in the population.

____ change in quantity demanded (movement along demand curve).

____ Elasticities of demand.

____ Change in revenue/sales due to change in price of product or service.

____ Change in revenue/sales due to change in price of competing or complementary good or service.

____ Change in revenue/sales due to change in income of customers/economy.

____ Other* (please list below):

__________________________________________________________________

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