Summary

 

Toyota and Lexus, one is the best-selling car brand in Malaysia and one is a luxury brand which people desire. Both brands are from a same company, UMW Toyota Motor Sdn Bhd. In this article, there are 2 brands under the same company, but I will only focus on Lexus. UMW Toyota Motor Sdn Bhd has announced that the price of Lexus will be increase in a range of 4% to 16% on all models from the beginning of 2016. The price increase is due to increase in cost of production causes by the fall in local currency against US dollar.

           

As people in Malaysia need their own vehicle for transportation purpose, this issue could be explained by using economic concepts. The increase in price would affect the demand and supply. In other way, the changes in demand and supply will affect the market equilibrium to change. The elasticity of demand and supply can be seen from the changes in price of the product and the response by the people who are related. Other than that, consumer surplus, producer surplus and deadweight loss can be analysed by using the graphs.