Supply & Demand, and Elasticity Paper
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Learning Team Assignment: Supply & Demand and Elasticity Paper
ECO/212: Principles of Economics
Economic decisions are made every day. Decisions on what type of goods and services we are willing to buy and at what price we are willing to pay. Consumers demand in supply as businesses determine how much supply will be sold, at what cost. To understand the flow of economics, we need to know how supply and demand works along with price elasticity. This paper will discuss what supply and demand is and what causes changes in them, while determining how changes in price and quantity influence market equilibrium. It will also cover how different substitutions impact the price, and compare and contrast different market systems and the role of an economist within each system.
Supply and demand are the root concepts of economic analysis since economics is basically concerned with a result and how the result is achieved. The law of supply and demand is “the claim that the price of any good adjusts to bring the quantity supplied and the quantity demand for that good into balance” (Mankiw, p. 77). Many things can change what the supply and demand of a good is.
Supply is affected by quantity produced, the price required to achieve a revenue source, the price of the inputs required, along with technology, government taxes and subsidies, and expectations.
Producing too much or too little will create a change in the cost of the supply. Producing too much can drive prices down and producing too little can drive prices upwards.
Firms require a certain price point to make a profit. If the product in question cannot support the revenue creating price, the product would not be considered profitable or worth producing.
Price of inputs can affect the supply. A significant factor of supply is the cost associated with the production of the product. Price of inputs affects the revenue generated by the manufacturer. A firm carefully observes the cost of an input. If...
ECO/212: Principles of Economics
Economic decisions are made every day. Decisions on what type of goods and services we are willing to buy and at what price we are willing to pay. Consumers demand in supply as businesses determine how much supply will be sold, at what cost. To understand the flow of economics, we need to know how supply and demand works along with price elasticity. This paper will discuss what supply and demand is and what causes changes in them, while determining how changes in price and quantity influence market equilibrium. It will also cover how different substitutions impact the price, and compare and contrast different market systems and the role of an economist within each system.
Supply and demand are the root concepts of economic analysis since economics is basically concerned with a result and how the result is achieved. The law of supply and demand is “the claim that the price of any good adjusts to bring the quantity supplied and the quantity demand for that good into balance” (Mankiw, p. 77). Many things can change what the supply and demand of a good is.
Supply is affected by quantity produced, the price required to achieve a revenue source, the price of the inputs required, along with technology, government taxes and subsidies, and expectations.
Producing too much or too little will create a change in the cost of the supply. Producing too much can drive prices down and producing too little can drive prices upwards.
Firms require a certain price point to make a profit. If the product in question cannot support the revenue creating price, the product would not be considered profitable or worth producing.
Price of inputs can affect the supply. A significant factor of supply is the cost associated with the production of the product. Price of inputs affects the revenue generated by the manufacturer. A firm carefully observes the cost of an input. If...