Running head: SUPPLY AND DEMAND AND PRICE ELASTICITY PAPER 1 Supply and Demand and Price Elasticity Paper Garret Lecat Garrett Schaefer Amir Nia University of Phoenix Principles of Economics 212 Karl Bitter March 14, 2010
Supply and Demand and Price Elasticity Paper Herbert Hoover once said “Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body- the producers and consumers themselves” (WorldofQuotes.com, n.d., para. 6). Economics is the study of trade between producers and consumers. The following paper will explain the cause of changes in supply and demand, describe influences in market equilibrium, address price elasticity, and define the roles of economists within market systems. When one thinks about what can cause changes in the demand for a good or service, there are many factors that can influence a change. The law of demand states, an increase in price the quantity demanded is lower (Economics with Steven Tomlinson, 2007). One could make the correct assumption that when price decreases the quantity demanded is higher. There are many different factors that influence a shift or change in the demand of a good or service. For example, substitution, complimentary goods, income, and changes in consumer expectations all have an influence on the change of demand (Mankiw, 2007). When these variables change, the variable effect the quantity demanded thus making a change in demand. When one variable either rises or falls one can correctly assume the reverse outcome of each variable will be true. Market demand is individuals household demands added together to make a market demand
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