Economics is commonly referred to as the dismal science however; it is a social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. ("Economics," n.d.) Economics can normally be broken down into macroeconomics, which focuses on the behavior of the total economy; and microeconomics, which focuses on the individual consumer. Microeconomics is the part of economics that analyzes the market behaviors of individual consumers and businesses in an effort to understand the decision-making process of those two communities. ("Microeconomics," n.d.) Microeconomics is concerned with the interconnection between individual buyers and sellers, including the factors that influence the choices made by the same buyers and sellers. Microeconomics in particular, focuses on the patterns of supply and demand including the constancy of price and output in individual markets. The law of supply is a microeconomic law that states, as the price of a good or service increases, the quantity of goods or services that supplier offer will increase, and vice versa. This means that law of supply says that as the price of an item goes up, suppliers will attempt to maximize their profits by increasing the quantity offered for sale. The law of demand is a microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and contrarily. The law of demand means that the higher the price, the lower the quantity demanded, because consumers’ opportunity cost to acquire that good or service increases, and they need to make more sacrifices to acquire the more expensive product.
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...goods that can be used in place of the more expensive goods with largely the same result are more cost effective for the consumer. So an increase in price for one good will lead to an increase in demand for the other since the other good is now cheaper.
I believe that economics a science because it literally is the social science that studies the behavior of individuals, households, and organizations when they manage or use scarce resources, which have alternative uses, to achieve desired ends. Economists use models to help themselves understand and test their theories and perhaps most importantly to predict what might happen in the future. If you have a model you can use previous economic data to test it and if you think that the model works properly you can hopefully use your model to try and predict what might happen in the future given changes in the economy.
The Island of Mocha in the video is an example of a traditional economic system evolving into a market system. Every person plays a key role in this traditional system. They had fisherman, coconut collector, melon seller, lumberman, barber, doctor, preacher, brownies seller, and a chief. The Mochans got sick of trading goods all across the island just to get the things that they want or needed. The Chief decided that they would use clam shell for currency instead of trading.
Macroeconomics studies the economy as a whole, while microeconomics studies the individuals and business decisions regarding the prices and goods and services (Investopedia, 2009). Macroeconomics looks at government and industry standard, rather than individual economic decisions. Microeconomics focuses on supply and demand and forces that affect price in an economy. Monopolies, such as GoodLife in the simulation, are a macroeconomic concept, because they are a top down view of a firm’s control of the economy. A monopoly is a market structure where one seller completely controls the market prices and fears no competition because none exist due to the barriers of entry. Price ceilings and price floors also fall under the macroeconomic scope because they are imposed by governments on whole economies or markets. A price ceiling is legal limit imposed by the government on how high the price of a good can be. Conversely, a price floor is the legal limit imposed by the government on how low the price of a good can be. Supply and demand of individual apartments are a microeconomic concept because it focuses on one product and not an industry. Suppliers are more willing to supply at a higher price, to cover their increased cost.
We the consumer would rather pay less for any product that is needed or want. Ultimately we are the reason for high prices as well as low prices. Prices of products do not always stay the same and more popular products have higher prices than less popular products. These fluctuations, high prices and low prices are from the idea of supply and demand. Supply and demand defines the effect that the availability of a particular product and the desire or demand for that product has on price. Generally, if there is a low supply and a high demand, the price will be high (Investopedia). To understand the idea of supply and demand, the understanding of supply and the understanding of demand must be defined. The Law of Supply states that at higher prices, producers are willing to offer more products for sale than at lower prices, also that the supply increases as prices increase and decreases as prices decrease (Curriculum Link). The Law of Demand states people will buy more of a product at a lower price than at a higher price, if nothing changes, at a lower price, more people can afford to buy more goods and more of an item more frequently, than they can at a higher price and that at lower prices, people tend to buy some goods as a substitute for others more expensive (Curriculum Link). In todays economics these ideas are seen frequently in everyday life. The laws of supply and demand are seen in many ways in the company Apple Inc. Each year Apple Inc unveils a long awaited mobile operating system and IPhone. We can also see many aspects of the law of supply and demand in Nike Inc’s Jordan Brand. Jordan Brand has released a number of...
“Economics is the science which studies human behavior as a relationship between end and a scarce means which have alternative uses’ seems to capture the essence of Microeconomics, but does not convey much of the spirit of Macroeconomics.”
There are different types of goods and they are normal goods, complementary goods and substitute goods. Normal goods means when there has been an increase in income (when employers/people receive their wages/benefits) and they are more likely to buy more finished goods from different stores, the demand for the goods will increase.
Seldom do individuals realize the significance of acquiring a proper understanding of economics as a whole, let alone any subfields that branch off of it. Every aspect of economics is relative to another within itself, much like the roots of a tree are relative to the leaves or fruit that it bears. Attempting to distinguish between micro and macroeconomics in terms of significance to the real world is unavailing. Having a formal comprehension of this science begins with the principles and theor...
Economic events are largely governed by the interaction of supply and demand. The law of supply states that with ‘all else being equal’ (ceteris paribus), as market price of a good or service increases/decreases so will an increase/decrease in quantity supplied. In turn, the law of demand states as market price of a good or service increases/decreases ceteris paribus, the quantity demanded will increase/decrease accordingly. The Australian avocado industry is an indicative example of microeconomics - the study of individual consumer or business decision making and spending behaviour in relation to the allocation of a limited resource and the correlation of supply and demand in determining
Economics is a science that examines how the individual side of people made a choice. Viewed with or without the use of means of exchange (money) in order to utilize scarce resources in producing a range of goods and services, and distribute it among them for consumption purposes, at present or in the future, among various individuals and community groups ( Samuelson, 1979). From the description of proficiency level, there is one thing that the main problem faced by humans in all fields of harnessing everything or scarcity. That's the main problem, was born two underlying reasons for the presence of economics as the study of human behavior. First, the limited resources for life, society, organizations and individuals. Second, the fact that the needs (needs) and desire
Only what to produce and how to produce, since distribution is not the task of economics.
It is the role of every government to safeguard its people in all matters including controlling the economy. Every economy faces different challenges including the business cycles that may emanate from the global market. In this paper we try to examine measures taken by the UK’s coalition government in trying to ensure that the economy benefits every citizen and reduces the overall burden to it. We consider the recent comprehensive review on spending.
Economics is the study of how best to allocate scarce resources throughout an entire market. Economics affect our lives on a daily basis, whether it is on a business level or a personal level.
In conclusion, generally speaking the Law of Supply states that when the selling price of an item rises there are more people willing to produce the item. Since a higher price means more profit for the producer and as the price rises more people will be willing to produce the item when they see that there is more money to be earned. Meanwhile the Law of Demand states that when the price of an item goes down, the demand for it will go up. When the price drops people who could not afford the item can now buy it, and people who are not willing to buy it before will now buy it at the lower price as well. Also, if the price of an item drops enough people will buy more of the product and even find alternative uses for the product.
That is, it is sensitive to price change, and also to the quantity demanded. This means that if many people are consuming a good, the demand is greater than if less people are consuming the good. To further clarify, take the example of attending college. In an environment where most of an individual's peers are going to attend college, the individual will see college as the right thing to do, and also attend college to be like his peers. However, in an environment where most of an individual's peers are not going to attend college, the individual will have a decreased demand for college, and is unlikely to attend.
The crucial importance and relevance of economics related disciplines to the modern world have led me to want to pursue the study of these social sciences at a higher level. My study of Economics has shown me the fundamental part it plays in our lives and I would like to approach it with an open mind - interested but not yet fully informed.
Definition & Workings of the Price Mechanism The Price Mechanism: The system in a market economy whereby changes in price in response to changes in demand and supply have the effect of making demand equal to supply. The price mechanism works as follows, prices respond to shortages and surpluses. Shortages cause prices to rise, surpluses cause prices to fall. The price of a product will either encourage producers to supply more or less, the higher the price the higher their profit and the more they are going to want to supply. For example should consumers decide that they want more of a good (of if producers decide to cut back supply), demand will exceed supply. The resulting shortage will cause the price of the good to rise. This will act as an