1) First of all, Ferraris are beautiful cars and luxurious which not many people cannot afford to buy them. On the eyes of economics the market system that governs our country which is capitalist gives many incentives for companies and for the buyers to best use their money. The first essential need for prices of Ferraris or any other type of property to go high or be worth more than what it really is, depends on how many people are willing of people to want those things.
Consequently, the system works as on how many people want to have a Ferrari as their personal property which regulates the market system. Second, in capitalist economy there is freedom of enterprise and choice, which gives entrepreneurs and private business the right to produce their choices of goods and services and to sell them in their chosen markets. Third, is the self-interest of individual’s is a motivating force to want to drive a Ferrari.
Fourth is the competition between buyers and sellers regarding what are the best prices the sellers could offer, and the amount of money the buyer is willing to pay.
In addition, Ferrari’s cost so much in America because it is an international product, it is not produced within American’s sources. Also, According to an Ferrari specialist: Ferraris costs so much because of “high quality leather, detailed stitching on the interior, high tech materials such as the super lightweight and super strong carbon fiber for better strength and weight reduction, cutting edge technologies like the paddle shift, dual clutch, F1 traction control, suspension set, overall for better performance but also comfort at the same time. The paint of a Ferrari is high quality and it can recover when it got a light scratch. Ferraris are hand built (although there is some machinery works that human cannot do), they’re crafted with patience and big attention to details. The workers are professional workers too.
Some short production models like the 599 GTO, Enzo, 250 GTO, 288 GTO, SA.” Overall, Ferraris are made in very small amount of quantity, meaning it’s very exclusive and all those money that they spent for the development of the car are paid off with high price because they only sell it in small amount. The price of those cars can also go up in the future. Another point is that when sales going up, or when sales maintain their same percentage, demand simultaneously up or maintained by consumers as well, therefore the quantity of Ferraris are high and been sold, as a result to this process the prices go up as well. Ferrari’s specialist also stated that “The 250 GTO is a very classic car and now it’s the most expensive Ferrari in the world by record. So it’s also a good investment.”
2) First of all, this would not happen in a capitalist society, because the government does not own all private properties and businesses. On the other hand, if our command system was communist, which the government owns pretty much everything, consequently Ferraris would not cost much because there would be no self- interest, competition and so forth from companies or form buyers. However, if there were free Ferraris on the parking lot of a dealership, they would be gone within a second, everybody including the people who work at the dealership would be taking one or more than one for them and their relatives. But, on economics eyes, when there is no price for things, the consumer (the people) will get all Ferraris, meaning there will be not enough supply to produce all needed Ferraris, and as the demand increases, therefore would be no more Ferraris to be sold or donated, consequently there will be no valid market price or the prices would fall resulting no production, no sale, no consume.
3) In my opinion, there is no fairest way to distribute them for both Ferrari and those that want them, because of the fact that when products are free, the demand supersedes the quantity of supplies, therefore would be no fair to of distribution, or the only why of distribution would be a type of auction. However, there can be found a fair price for all products we have in our society, it would start as the price average of thing, this would in?uence the relative value of the product compared with other goods and services.
Second, would be the demand and supply of goods and services determine what is produced and sold. Third, the customers’ income is an important factor, because it depends on the income of that community, city, or any place and their income in?uences what customers can afford. Also, the number of customers, the amount that people earn, their wealth, and the relative prices of products determine who can afford to buy different goods and services in that specific area. In addition, the status of the demand, and also the quality of the supplies resources will determine a combination of factor that will make a fair price of the product.
4) First of all, a price ceiling is a government-imposed limit on the price charged for a product. Second, the market price is at which the supply of an item equals the quantity demanded. According to the question when the incentive created by the government when a price ceiling is imposed and it is higher than the market equilibrium price, the price ceiling has no impact on the economy. But, when the government imposes free products such as in this case “Free Ferraris,” it is regulated by a communist government. Consequently the entrepreneurs will not take the risk to invest any type of money in the Ferraris, because certainly they will not make any profit from it. And there will be no competition among buyers and among sellers, because that is what makes the price to the equilibrium price. Therefore, any below price of the Ferraris would create a shortage; the quantity demanded would exceed quantity supplied, which is an excess demand.
Cite this page
Why Ferrari’s Are Expensive?. (2016, Dec 17). Retrieved from https://studymoose.com/why-ferraris-are-expensive-essay