Hyundai’s+Swift+Growth+Lifts+Alabama’s+Economy

=Hyundai’s Swift Growth Lifts Alabama’s Economy =

 Source: New York Times, []  Date of extract: Feb 18th, 2011

Summary: This article talks about how Hyundai, a Korean car company, has affected the economy in Montgomery. With its factory rooting in Montgomery, Hyundai has offered many jobs to the locals; it has a high demand for employees because of its increasing massive production lines. This is seen in the article where it states "recently hired 600 additional workers to operate a second shift for the Santa Fe and plans a third, with 1,000 more jobs". So, with an increased demand for labor, one of the four factors of production, Hyundai shifts the demand curve of workers to the right and reaches a new equilibrium with the supply curve. This reduces the number of unemployed people and helping the local economy. The article also gives insight about the law of demand; according to the article, "the South Korean company thrived as Americans sought out cheap cars just as Hyundais were improving in quality". From here, it resonates with the law of demand, which states that the quantity demanded for a product will increase as the price of the product decreases. This particular statement also talks about competition, as Americans are prefering Hyundai over other brands due to the cheap price and quality. As of now, the citizens of Montogomery seem to be happy with their current economy.

Vocab:  Demand Curve: A graph showing the relationship between the quantity demanded and the price of a good or service, holding everything else constant  Supply Curve: A graph showing the relationship between the quantity supplied and the price of a good or service, holding everything else constant.  Factors of Production: Everything needed to run an economy, categorized in four main categories, land, labor, capital, management.  Law of Demand: A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.  Competition: Term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services. Recession: the state of the economy declines

Graph 1: The Market of Workers in Montogomery

This graph is an example of the market of workers mentioned in the summary. As Hyundai increases its company size, it requires more employees. As a result, the demand curve shifts from D1 to D2 and moving the equilibrium from E to E2. This shift of equilibrium causes a shift along the supply curve (Q1 to Q2), thereby increasing the quantity of workers being employed.

Evaluation:

To a big extent, I approve what Hyundai is doing in Montgomery. As United States is still under recession, many people find themselves without jobs. By increasing its company size, Hyundai helps solving this employment crisis by requiring more labor force. Yet, there are potential risks. If Hyundai continues to employ people, it might cause a shortage of workers in the market and cause problems in the economy (other fields might not have enough labor force).