The earthquake and subsequent tsunami in Japan had a significant negative impact

Question

The earthquake and subsequent tsunami in Japan had a significant negative impact on Toyota, reducing their ability to produce parts to be delivered to their manufacturing and assembly plants around the world. Using the laws of supply and demand as a construct, research and discuss the impacts on Toyota and the auto industry in general from such an event. How does a business remain competitive when prices must remain high due to a reduction in supply? Please answer in 250 words or more and make handwriting legible

Explanation / Answer

The earthquake and subsequent tsunami reduced the production because it had an adverse effect on the factors of production such as land, labour and capital. Whenever, the factors of production are less or their cost increases, the supply decreases and also, their cost increases. Because, these natural disasters causes harm to human capital as well as other capital, which are necessary for the production purposes .

The business remains competitive as due to the circumstances the demand of people will also reduce. And the lack of demand and lack of supply will eventually get to an equilibrium. But as the conditions get back to normal both the sources of production and sources of income gets back to place and everything back to normal.

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