License+Plates+Costlier+than+Cars+in+China+by+Shan-Yuan+Liew

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT:= License Plates Costlier than Cars in China

=SOURCE:= http://www.thetulsanews.net/story/203636344

=DATE EXTRACT WAS WRITTEN:= 20th February, 2012

=DATE CURRENT EVENT WAS WRITTEN:= March 7th, 2012

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= The article explains how the price of plates has increased over the past several years. Recently, the price has raised to a record high of 55,400 RMB, which is more expensive than some small locally produced cars. The reason for the high price for plates is because the demand for cars in Shanghai has increased to a level too high to manage. To lower the demand for cars, the government makes it's citizens bid over plates for a high price. The higher the price, the less demand. "According to acution organiser Shanghai Commodity International Co, the lowest bid for a private car plate rose to 55,400 yuan, up 2,600 yuan from January. It caused some bidders to complain about the "insane" cost. This dislike for the high prices will deter the amount of consumers. Also, seeing as how Shanghai has the worlds longest subway system in the world, a bus system, and a plentiful amount of taxi's, the price elasticity of demand is not very high. People will be turned away by the poor road congestion as well.

=VOCABULARY TERMS AND DEFINITIONS:=
 * Price elasticity of Demand (PED) -The measure to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in the price of the product/service. If a product is inelastic, there will be a small drop in consumers if the price increases. If a product is elastic, there will be a large change in consumers when the price increases.
 * Supply - The amount of product/service producers are willing to sell at a given price.
 * Demand - The consumers desire to own or purchase a good/service.
 * Substitute Goods - When the demand for one good increases when the price of another good increases.

=DIAGRAMS:= =EVALUATION:= China has seen a huge increase in wealth over the past decade. With that wealth, many of its citizens are interested in purchasing cars, a convenient form of transportation. However, as a city with 18 million people, it cannot handle the environmental and congestion issues if so many people owned a car. Also, the government does not control the number of vehicles produced every year, as decreasing production will affect their economy. Therefore, their solution to controlling the demand is to make consumers bid for the license plates. As the demand increases, the government had to raise the price, or face serious traffic congestion. Also, Shanghai as invested millions of dollars improving their public transportation. They have an efficient bus system, the worlds longest subway system with over 10 different lines, and an enormous amount of taxis. Those that cannot afford cars will have no problem getting around through public transportation. Therefore, even though a car may not be attainable by everyone, the demand remains elastic since there are substitute means of transportation.