Econ Essay Example | Topics and Well Written Essays - 750 words

Econ - look for ExampleThis paper will look at the integrity of supply and pick out and how it is applied in real life.The law of supply and demand is perhaps the most basic concepts taught in economics class. The law of supply and demand enables us to understand the setting of quantity demanded and equipment casualty set in the market. It likewise stresses that the wrong level and quantity demanded varies according to changes in the markets through which there are movements within or shifts in demand and supply curves.First, the law of supply stresses that (1) at higher prices, producers are willing to suggest more products for sale than at lower prices (2) the supply increases as prices increases and decreases as prices decreases and (3) those already in line of merchandise will try to increase production as a way of increasing profits (qtd from Reviews of Laws of bestow and Demand 1). This law creates a supply curve which is upward sloping. Logically speaking, manufacture rs will tend to answer to supply more in the market if the price for their product is high. With lower prices, they hold less motif to increase production as profits are squeezed out.On the different hand, the law of demand states that (1) plurality will buy more of a product at a lower price than at a higher price (2) at a lower price, more people can open to buy more goods and more of an item more frequently, than they can at a higher price and (3) at lower prices, people tend to buy some goods as a substitute for other more expensive(qtd from Reviews of Laws of Supply and Demand 2). These reasons are consistent with the fact that people want to maximise utility through the consumption of more goods and services. Since they only have limited income, their overall aim is to let on lower prices or lower priced goods in order to allocate this budget most efficiently. The law of demand and supply determines the price charged and the quantity demanded in the market. Through mar ket forces, the prices tend to be at equilibrium where suppliers are willing to sell goods and buyers would be willing to pay at that level. With this intersection withal is the quantity demanded which determines the amount that buyers are willing to buy and suppliers are willing to provide the market with. The work of the law of supply and demand bewilders more apparent in the present economic situation in the US. As customers struggle with lower income levels, they tend to buy lower priced goods than higher priced ones. This is true in my eggshell price becomes one of the primary considerations in my purchases because I would want to maximize the utility that I generalise from my money. Also, I would demand more of a product if the price is lower. For instance, since burgers cost $4, I would only have to consume 1 in order to have money for drinks. However, if the price goes down to $2 each, thus I will be willing to purchase two burgers.For a supplier, prices now also becom e more constraining. They wouldnt want to sell products which will not be profitable for them. Using the burger example and presumption of $4 as the equilibrium price, suppliers would be willing to supply 20 burgers at that level. Raise the price to $5 and they would say that they would even want to supply 30 or more because of the profit prospect. If prices change state to $2, then they might