Microeconomics

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- Taxation

Based on article given shows that petrol hike has a little impact as it increases transportation costs. Besides that, government’s initiative to monitor increase in prices of goods to ensure the cost of living among Malaysians remained at a reasonable level. Malaysia does not apply tax on petrol but if government apply tax on fuel we can look the behaviour consumer as price of petrol increases.

It shown that, if government apply tax on fuel, both the consumer and producer surplus will decrease because all the behaviour of consumer will change after the tax had been applied on fuel. Consumer also needs to bear the tax burden even though tax is important for nation.

CONCLUSION (CONSUMER)

As said in the article, petrol climb gave a major effect on the cost of crude foodstuff, transportation costs and in the meantime it is over anticipated that would increment in the average cost for basic items to customers. At the point when the fuel cost climb, it will prompt the expanding in the transportation cost particularly to the supplier where they have to supply the crude foodstuff to retailers or purchasers. As the crude foodstuffs are profoundly requested for our ordinary living, it will impact the buyers’ capacity to buy. Furthermore, it shown that, if government apply tax on fuel, both the consumer and producer surplus will decrease because all the behaviour of consumer will change after the tax had been applied on fuel. The government’s decision to increase the price of petrol and diesel will effect the lower-income groups. So, government must take into consider on the increase in price of goods to ensure the living costs is not effected in Malaysia.

ARTICLE (FIRM)

Honda Malaysia Announces Price Increment Effective January 2016

Petaling Jaya, 19 October 2015 – Honda Malaysia Sdn. Bhd. (Honda Malaysia or the Company) today announced that prices for Honda vehicles will be increased effective January 2016 due to the depreciation of the Malaysian Ringgit. The Company is currently analyzing the impact and estimates the price increase to be around 2% to 3% depending on the model. Honda Malaysia will continue monitoring the exchange rate situation closely and will decide on the price in December 2015. Managing Director and Chief Executive Officer of Honda Malaysia Mr. Yoichiro Ueno said, “Over the past years, Honda Malaysia has streamlined operations in order to be more efficient and also worked hard to introduce products at very affordable prices to our customers. Since the introduction of Honda models with its current price, the Ringgit has depreciated by 20%-30% against the US Dollar. The drastic depreciation of the Ringgit has caused a significant increase to the cost of imported parts and components. Despite our efforts to reduce operational costs and expenses to mitigate the impact, we have to take the last measure to shift the impact partially to the price. The automotive industry is especially vulnerable to fluctuations in currency due to imported parts and components in foreign exchange but the effect is usually not immediate. Honda Malaysia has purchased some parts and components earlier when the Ringgit currency was stronger. However, current and future purchases are exposed to the Ringgit instability. “After weighing all possible options, a price increase is an inevitable step for Honda Malaysia in order to continue offering high quality products and services to our customers. If the Ringgit currency appreciates to the previous level, we would re-evaluate the pricing structure once again,” added Mr. Ueno. “Honda Malaysia began 2015 strongly and is currently leading in the Non-National Segment as at September 2015. With this, we are positive to achieve our 2015 sales target of 85,000 units with the support of Honda customers in Malaysia,” commented Mr. Ueno.

INTRODUCTION (FIRM)

Honda Motor Co.,Ltd. is a Japanese open multinational aggregate organization basically known as a producer of automobiles, cruisers and force gear. Honda has been the world's biggest cruiser manufacturer since 1959 and additionally the world's biggest producer of interior burning motors measured by volume, creating more than 14 million inward ignition motors every year.

Honda became the second-largest Japanese automobile manufacturer in 2001. Honda was the primary Japanese car producer to discharge a committed extravagance brand, Acura, in 1986. Beside their core automobile and bike organizations, Honda likewise fabricates garden hardware, marine motors, individual watercraft and force generators, and different items. Since 1986, Honda has been included with manmade brainpower or mechanical technology inquires about and discharged their ASIMO robot in 2000. They have likewise wandered into aviation with the foundation of GE Honda Aero Engines in 2004 and the Honda HA-420 HondaJet, which started generation in 2012. Honda has three joint-wanders in China (Honda China, Dongfeng Honda, and Guangqi Honda).

PART 1 (SUMMARY)

The fall of the Ringgit keeps on influencing costs of products crosswise over Malaysia, and this time it incorporates Honda vehicles in the nation. Honda Malaysia has declared on 19 October 2015, that it anticipates that the cost increment will be around 2%-3% relying upon the model ahead of schedule in January 2016, however right now, Honda Malaysia are as yet examining the aggregate effect to the business yet now they as of now expand costs to their Honda vehicles.

Year-to-year, Honda Malaysia has do couple of techniques so as to be more proficient furthermore endeavoured to present items at exceptionally moderate costs to Honda clients. As per article, subsequent to the presentation of Honda models with the present costs, the ringgit has devalued by 20%-30% against the US dollar. The great deterioration of the ringgit has brought on a noteworthy increment in the cost of the car business of imported parts and segments, where it is particularly uncovering to changes in cash esteem.

As a conclusion, the increasing average cost for basic items combined with higher auto costs in respect to the lower wage will give sway on auto deals with a few shortcomings to be seen among national brands whose purchasers are more aware of the typical cost for basic items.

PART 2 (FIRM)

- Demand and Supply

According to Honda’s annual report 2015, total demand for Honda decreases around 4% from 2014 to approximately 6,800,000 units. This is because