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Economics: Supply And Demand

Economics: Supply and Demand

“When an artist looks at the world, he sees color. When a musician looks at the world, she hears music. When an economist looks at the world, she sees a symphony of costs and benefits.” (Colander, 2004) There are certain things that a society’s economy needs. These things are supply and demand. Supply and demand is the balance between knowing what to produce and how much of it to produce. The more resources used, and people are willing to pay for, the more that is demanded.
“Economics is the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society.” (Colander, 2004) Economics can also be looked at as a social science that deals with the production, distribution, and consumption of goods and services. What and how much to produce, how to produce it, and for whom to produce it are three problems facing any economy. Another problem faced by an economy is the issue of scarcity. Scarcity means that there is not enough of a product to fulfill the wants or desires of consumers. Society can greatly influence this by having trends in certain areas. Clothing is something greatly influenced by society because people in one area will likely wear different styles than people in another area.
Demand can be directly related to prices, assuming all other factors remain constant. If there is a willingness to pay for a product, there is a demand for that product. The law of demand states that as prices rise demand falls and as prices fall demand rises.
As the price of an item changes, the desire to buy that item changes as well. For example, an individual really wants an item that they can’t afford. If the price is cut by half the individual is more likely to consider purchasing the item. That items demand will increase from the desire of other consumers as well, but when the price goes back up, the demand will fall greatly....