Sunday, October 16, 2011
Beamer, Benz, or Bently... how bout neither?
As many of us teenagers know, Beamers, Mercedes Benz, and Bently's are the hottest cars on the planet earth. These luxury goods are the status symbol of our favorite rappers and celebrities in the 21st century. People like Tom Cruise, Rick Ross, Lil Wayne, and many more show off their luxury cars regularly, causing a "demand" amongst young kids all over the world. I put quotes around "demand" because it really is not a demand that kids have... its a fairy tale and a dream. Demand is something people have the ability to purchase with their current wealth, which very few have. Therefore, Beamers, Mercedes Benz, and Bently's will never be in demand with young people. Less than 3 percent of the world can afford such luxury items. This may have you thinking, if only three percent of people can buy these goods, how do they stay on the market and make any money? The answer is simple. Luxury goods always stay above the market, when I say this, I mean that supply and demand of these more expensive items are above the regularly priced car lines. For example, a Ford Focus is a middle class commonly bought car. This opens up a much larger economic class who can afford to purchase this car, causing the supply to fluctuate depending on the demand. This is not the case for luxury goods, which are perfectly inelastic because as opposed to the supply being the manipulated variable, demand is the manipulated variable for luxury goods. This is the reason that people are on lists just to get the opportunity to purchase some of the most luxurious Beamers, Benz, and Bently's.