Eco 372 - Product Purchase and the Economy

Product Purchase and the Economy

Carla Roberts

Eco/372

3/2/16

Jeremy Alessandro

Product Purchase and the Economy

The product that I selected was a Bay Liner 2016 290 BR series boat. The cost of the boat is 23,899, interest rate 4.9% monthly payments roughly around $450.00. I choose unemployment rate and interest rate for my two economic indicators. If unemployment rate is high, the interest on the boats will go down because no one can afford to purchase the boat, so the demand is low and supply is up. Currently the unemployment rate is 5.8% as of December 2015. Spending power of someone unemployed decreases greatly and the consumer does not have extra money to make any extra purchases. The buying power is lower because of the increase in taxes. The greater number of unemployment the more the government has to put out.

        When the consumer pays less in interest, it enables them to have more money to purchase or spend, which in turn causes a wave effect of bigger spending in the economy. If interest rates are high, consumers have to cut back on spending.  Recreational boats sales will rise 6.1 percent annually to roughly $13.1 billion in 2018, this study analyzed $9.7 billion from data 2003, 2008, 2013 (www.freedoniagroup.com).

One must first understand the demand and supply. If demand decreases and supply does not change then it causes higher price. The impact on supply is high and demand is low, because there are plenty of boats.  But if supply increases/deceases and demand is not changed, then this will cause lower/higher prices. The impact on the price of the boat is expensive and influences my decision. I would need to factor my car payment, insurance, and credit cards into the plan if I want to  purchase the item it will be a 60 month commitment, which I cannot see paying that long.