Business / Trends In Consumption Patterns
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Autor: anton 05 January 2011
Words: 601 | Pages: 3
Trends in Consumption Patterns
This article is designed to: 1. define economics, 2. define microeconomics, 3. define law of supply, 4. define the law of demand, and 5. to identify the factors that lead to a change in supply and a change in demand.
Economics is defined as: The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems (www.answers .com accessed 02Oct07). Basically I believe that this means that you are trying to interpret how people will react. Economics is broken down into 2 parts Micro and Macro economics.
Microeconomics is defined as: The study of the operations of the components of a national economy, such as individual firms, households, and consumers (www.answers .com accessed 02Oct07). This is a study of the relationship between the consumer and the supplier based on various fluxuations in the market.
The Law of supply is defined as: A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services offered by suppliers increases and vice versa (www.answers .com accessed 02Oct07).
The law of demand is described as: A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa (www.answers .com accessed 02Oct07).
Supply and Demand: The market process is generally modeled using the economic concepts of supply and demand. The plans/desires of consumers are embedded in the concept of demand and the plans/desires of producers in the concept of supply. The plans of these two types of economic actors are brought together in markets, which are the entities in which transactions occur. In a modern economy, markets do not require that the buyers and sellers meet in a geographic place, so markets no longer require actual "marketplaces." (www.answers .com accessed 02Oct07).
The concept of demand represents the market activity of consumers. Demand is defined as the quantity of a good or service that consumers will be both willing and able to purchase at any given price during a specific period of time, holding all other factors constant. Demand is, therefore, a relationship between price and quantity demanded. Many factors other than price affect the amount consumers choose to purchase, and these factors are what is being held constant within the concept of demand (www.answers .com accessed 02Oct07).
This relationship between price and quantity demanded can also be represented graphically. A demand curve represents the maximum price that consumers would be willing to pay for a particular quantity of the good. Consumers are willing to purchase something because they value that product more than its opportunity cost. The opportunity cost is the value of the best alternative they could purchase with the same money (www.answers .com accessed 02Oct07).
The nature of this relationship between price and quantity demanded is so consistent that it is called the law of demand. This law states that the relationship defined by the concept of demand is an inverse or indirect one. When prices rise, other factors held constant, consumers will purchase less of the good, and vice versa. The rationale for the law is that when the price of a product changes relative to the price of other products, consumers will change their purchasing patterns by buying less of the now higher-priced good and purchasing more of other goods which are now relatively less expensive that satisfy the same basic wants. Goods that satisfy the same basic wants are called substitutes (www.answers .com accessed 02Oct07).
http://www.answers.com/law+of+supply?cat=biz-fin accessed 02Oct07
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