Ten Principles of Economics and How Markets Work rvsd.docx

How the economy works as a whole we get to understand

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How the Economy Works as a Whole We get to understand that the standards of living in a country depend on how much its people are able to engage in production. Consequently, a country that has more skilled individuals is likely to have high production levels. Another concept that we learn is that when more money is printed, general prices of products rise. Such a situation is referred to as inflation. How Society Manages its Scarce Resources Market economies are used to manage limited resources by societies (Rios, McConnell, & Brue, 2013). They are characterized by people who are sanctioned by the processes and have control over the resources. In addition, individuals in these market economies make decisions regarding the people they work for and how to make investments. Benefits that people enjoy are
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TEN PRINCIPLES OF ECONOMICS AND HOW MARKETS WORK 4 a result of the economic interdependence that exists in all the markets. Some goods can only be produced in certain areas. Therefore, these areas advertise the products to other regions, and in return, they get to buy what they cannot produce. Such interdependence makes trading possible and improves the quality of life. The demand curve is used by economists to show the amount of a product that consumers are willing and are able to purchase (Rios, McConnell, & Brue, 2013). It is dependent on price changes. Lower prices attract more demand as more consumers are able to buy the goods. Such a situation leads to the curve to slope downwards. The quantity of goods supplied also depends on their price. For the supply curve, when prices rise, a number of goods supplied to the markets
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