Toyota+cuts+North+America+production

** Title of Article: ** Toyota cuts North America Production ** Source: **  [] ** Date of Article: ** April 9th, 2011  ** Summary: ** On Friday, April 8th, Toyota made an announcement that it will suspend production in its North American plants for several days this month due to problems with supplying parts from Japan. This problem is rooted from the March 11th earthquake and tsunami that struck Japan this year, causing a major setback to many automakers and many other industries. Toyota had said that the decision was “inevitable”, after its production lines in Japan suffered major damage. Although “extraordinary efforts are underway to help suppliers recover”, there is undoubtedly going to be a severe slowdown in production for many industries in Japan within this period of time. Toyota also carried on in a statement, announcing that the company will continue providing employment to its 25,000 North American workers during the non-production days.  ** Vocabulary: ** __ Supply __ : Quantities of goods and services that sellers are willing to offer at various prices at a given time and place. __ Demand __ : The desire of purchasers, consumers, clients, or employers, etc., for a particular commodity, service, or other item. __ Inflation __ : Demand for goods is rising faster than companies can produce. __ Consumer __ : A person or organization that uses a commodity or service. __ Market __ : A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures where by persons trade, and  goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things. __ Commodity __ : A commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market. __ Economy __ : The study of how to allocate limited resources amongst unlimited wants. <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">__ Positive statement __ : A statement that can be proven by statistics or some sort of data/evidence. <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">__ Normative statement __ : A statement that is based on opinion or value judgement because it cannot be proven by statistics. <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">__ Macroeconomics __ : The study of economics of a nation as a whole. <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">__ Scarcity __ : The fundamental economic problem of having seemingly unlimited human needs and wants, in a world of limited resources. <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">__ Factors of production: __ The resources that are necessary for production: Land, labor, capital, entrepreneurship. <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">** Graph: ** <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> <span style="line-height: 19.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">** Conclusion and Evaluation: ** Supplies of the factors of production are not unlimited. It is because of this that the economic concepts of scarcity, choice, and opportunity cost exist. I have chosen to use a Production possibility curve (PPC) to explain this article. A PPC shows the maximum combinations of goods and services that can be produced by an economy in a given time period, if all the resources in the economy are being used fully and efficiently and the state of technology is fixed. Graph 1 shows the PPC for the country of Japan before and after the March 11th earthquake and tsunami. Before the earthquake, Japan had the possibility of producing anywhere on PPC1. The earthquake destroyed many of Japan’s factors of production, therefore the potential output of Japan declined and the curve shifted inwards to PPC2. In this article, the main factor of production we will deal with is capital. Because of the damage done to Japan’s factories, like Toyata’s car production lines in Japan, Japan has lost some of its factors of production known as capital. This means that Japan can currently produce few manufactured goods than before. In this case, it is the supply of Toyota’s car parts. Also, because of the natural disaster that hit Japan, its land is no longer able to produce as much agricultural output as it could before because of the damage done to the farms and fields. Today, Japan is still trying drastically to improve its situation. Many foreign countries and private companies have pledge their aid and assistances to help Japan through this tough period of time. Hopefully, Japan’s factors of production will quickly revive back to its past status and the PPC curve will move back to PPC1 soon!