Economics in Today’s Society Essay Example

in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. Macroeconomics can be used to analyze how best to influence policy goals such as economic growth, price stability, full employment and the attainment of a sustainable balance of payments(Investopedia,2008).

The Law of supply states that quantity supplied increase as price increases. When producer are able to raise the price of an item they have a tendency to have more of these items on hand. For example if a DVD supplier is able to sell a DVD for the price of $8 dollars as opposed to $4 then the supplier will have more DVD(s) on hand. The Law of Demand states as higher the price of an item the lower the demand for that item which creates a surplus.

Once there is a surplus of items suppliers will lower the price to ensure that their product sales. This practice is an example of how the invisible hand of economics control pricing. A change in anything that affects demand besides price causes a shift on the demand curve. Several factors can cause a shift on the demand curve; they are change in price of related goods, change in income, change is taste, change in expectations and taxes imposed on the consumer.Increase of income causes a rise in the purchase of normal goods such as food, clothing, and housing; however, an increase in income is also a direct cause for the decline in the purchase of inferior goods. Consumer’s purchases are based on price and because of this pricing of closely related item

has an effect on the demand curve.

If an individual can find a product that is close to what they are wanting but at a cheaper price, then the individual will go for the less expensive items, thus pushing the demand for the original product down.As individual grow older their taste is certain items change, for example as a teenager a person may buy hard rock cd(s) but as they grow older they may tend to favor smooth jazz this change causes a direct shift in the demand for hard rock cd(s). As individuals look to the future their expectations of what to come can also cause a shift on the demand for certain items. Tax on items can also cause a shift of demand, for instance, as tax on cigarettes continues to rise, the demand for cigarettes will begin to decline.A change in anything that affects supply besides price causes a shift on the supply curve.

Factors that affect the supply curve are; price of inputs, technology, expectations, and taxes and subsidies. If a producer finds that the cost for producing specific items is getting higher than supply of that item will begin to decrease as it is not economically sound to continue to make a large amount of these items. Technology has a direct affect on supply, as it becomes easier and less expensive to produce an item more of that item is produced.As with the demand curve expectation also has an affect on the supply curve, if consumers expect the cost of a product to increase they will buy more of that items which causes a decrease of supply. An example of

this would be when the price of gas is expected to raise people will fill their car up and also fill gas containers. Tax also has an effect on the supply curve as it does on the demand curve, as taxes increase on a specific items then the supply for that particular items increase as people stop purchasing the item.

In an article titled “Research focuses on Dining Pattern, Demographics,” it was reported that dining out has declined. This decline is closely related to housing problems and rising gas prices. The research indicted that the most effected by the economy problems are the “Baby Boomers (ages 43 to 62) research show that these individual tend to reserve dining out for special occasions. The research also indicted that “millennials,” which includes those age between 16 and 31 eat more meals away from home than at home.The study also indicated that when it comes to the quality of dining 74 percent of individuals would prefer to wait until they can afford a meal at a nice restaurant before going out as opposed to settling for a low quality meal just for the purpose of going out. So as indicated in the study income and price has shifted demand curve when it comes to dining out.

It is estimated that once the economy evens out there will be an increase in the consumption of meals outside of the home. Reference Economics. InvestorWords. com. Retrieved August 11, 2008, from InvestorWords.

com