The growth of the Singapore car population indicates that the equilibrium quantity transacted has increased. This is due to a rise in both the demand and supply of cars leading to a rise in quantity supplied and quantity demanded respectively. Some factors affecting the demand for cars include tastes and preferences, level of wealth and income, population and ease of acquiring credit while those economic factors affecting the supply include productivity, government policies and number and size of firms. This Economics essay seeks to use a demand-and-supply diagram to illustrate this development described in the Singapore car market, before explaining the demand and supply factors mentioned above. It would then contextualize the theoretical economic analysis to Singapore by addressing the events which had occurred between the years 1997 to 2008.
[Insert a diagram on increase in demand and supply]
As depicted, an increase in both demand and supply of cars has resulted in an increase in the equilibrium quantity. This addresses the fundamental theoretical reasons for the rapid growth in car population in Singapore over the last ten years.
After having established how a rise in demand and supply has caused the growth in car population, this essay will now look into greater detail the reasons for them. A change in taste and preferences could have resulted in the rise in demand. Car companies could have engaged in more extensive advertising which could have attracted consumers to purchase more cars.
An increase in the level of wealth and income could also have enabled consumers to not only have the willingness but also the ability to afford a car, contributing to the rise in demand as well. This increase in level of wealth and income could have been possible because of economic growth.
Another factor would be population growth. With an increase in population, especially those in the workforce, more people can afford or would need to purchase a car as a mode of transport. Hence, an increase in population growth could have explained the rise in demand for cars.
Furthermore, the ease of acquiring credit could have encouraged more people to purchase cars. The interest rates of loans from banks could have fallen, resulting in cost of borrowing to decrease, therefore consumers found it much easier to afford a car when borrowing money to finance this purchase. Thus, the ease of acquiring credit could possibly account for the increase in demand.
Moving on, with respect to the factors for a rise in supply, one major factor could be higher productivity in the production of cars. With this, using the same amount of resources, car companies can produce a greater number of cars. This in turn addresses the growth in car population.
In addition, Singapore's government policies could have caused a rise in supply. Taxes imposed on cars could have been lowered, which would be appealing to consumers to purchase a car since it is now more affordable. Furthermore, the supply of cars could have been increased if there has been an increase in the Certificate of Entitlement, which allows Singaporeans to own a car. Thus, governmental factors also could have led to the growth in car population.
Moreover, an increase in the number and size of car firms could have led to the rise in supply of cars. With more car firms entering the market and existing firms expanding, the production of cars would increase as well. This evidently shows an increase in car population.
In conclusion, contextualizing the theoretical analysis to Singapore, during the years of 1997 to 2008, there has no doubt been quite a few economic crises, but each time the Singapore economy came through robustly. Beginning with the Asian Financial Crisis in 1997, September 11 and the Dot-com bubble which caused a stock market crash in 2001 as well as SARS in 2003, Singapore’s economy was not severely negatively affected. In fact, the Singapore economy was able to recover quickly and experience a strong economic growth instead. Higher income levels followed this economic growth and therefore resulted in a rise in demand for cars because they were able to afford such a purchase.
On the supply side, government policies arguably played an important role in deciding the supply of cars with the Vehicle Quota System (VQS) which comes along with the Certificate of Entitlement (COE). In the final analysis, the number of COEs must have increased, accompanied by a drop in COE prices, accounting for the increase in supply of cars.
JC Economics Essays - H1 and H2 A level standard economics essays - tutor's comments: While this sound, clear, and interesting economics essay was written under timed examination conditions and is actually a very good analysis of the Singapore car market in Singapore's economic history, it could have done better had it woven the economic theory presented with real life examples instead of waiting till the conclusion to bring in exact Singapore analysis with real world examples. In other words, sound economic theory must be linked to real examples. This economics essay is very strong in economic theory, yet could have done better by using more real world and relevant examples throughout the paper. However, how else would you have made this paper better? Think of other ways to make this analysis more robust.
