Supply

This week in Economics we learned about supply. Supply is the ability and the desire of the producer to sell a product. The law of supply says that when prices go down, quantity supplied goes down and when prices go up, quantity supplied goes up. Producers are motivated to increase supply by profit. They want to make more profit and so will supply more at a higher price. The supply curve is constantly sloping upwards unlike the demand curve. This is because producers want higher prices but consumers want lower prices. I think supply and demand are the main things that drive the economy. Consumers will demand more products at lower prices and producers will supply more products at higher prices. This relates to everyday life. Supply and demand constantly affect prices. Prices are either lowered or raised by the demand of consumers and the supply of producers.

Elasticity

This week in economics we continued learning about the relationship of price and quantity demanded. We further learned about elasticity of demand. We learned that you have to take the percentage change in quantity and divide it by the percentage change in price. Then if that number is less than one, the change is elastic. If it is greater than one it is elastic. We also learned of a few examples that represent elastic demand and inelastic demand. Insulin is inelastic because no matter the price the same amount of people who need it will buy it. Movie tickets are elastic. As the prices go up or down there is a big change in the amount of tickets sold. This is important to daily life. Many businesses look at elasticity to see how they should change their prices to yield the most revenue. They use the Total Revenue Test. They look at the quantity demanded at the original price and how much money was made and compare it to the quantity demanded at the new price and how much money was made. They then will choose the price that makes the most revenue.

Economic Demand

This week in Econ Class we learned all about demand. We learned about the law of demand, demand schedule, and demand curve. We learned that in order to have demand, you have to have the desire to buy something and the ability to purchase something. The law of demand states that as the price of an item goes up, the quantity of that item will go down. Similarly, as the price of an item goes down, the quantity of that item will go up. We did some demand curves and schedules to prove this. I think that this basic principle is true but I feel that it is much more complex than this.  There are many factors that can effect the demand of a product or service.  There are things like consumer expectations, substitute goods, consumer taste, and market size that affect the demand of an item. I believe that income would be the biggest factor to affect demand. The more income a person has, the more willing a person would be to buy a product at a higher price. Income to me seems the most influential. I think the more money you have the more quantity you will buy also. The principle of  demand still relates to everyday buying and selling. The rule stays to true to every product or service that is sold even into today's market.