eco 204 week one discussion 2.docx

eco 204 week one discussion 2.docx - Analyze how the law of...

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Analyze how the law of demand applies to a recent purchase that you made. Describe how the product has changed in price and explain whether the price change is due to supply or demand. Did the change in price affect your decision to purchase the item? The law of demand basically states that as demand increases, so does the cost. As demand decreases, the cost usually decreases as well in order to promote sales. An important factor in this law is the available supply of the product. A changing supply will cause fluctuating prices if the demand is constant. If demand is constant but supply increases, cost will generally decrease. If the supply shrinks with a constant demand, the price will generally increase. My example is one that everyone can relate to in some way: Gasoline. While there are many external factors that tend to cause fluctuations in the price of gasoline, the major ones deal with supply and demand. Just a few years ago, gasoline had risen to nearly $4.00 per gallon in many parts
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