Term Definition Paper

Term Definition Paper

Economics is used in almost all aspects of life. It is about choice and decision making. We need to know economics so we can understand how to live and exist in our world today and understand how the business world functions. As the concept of economics is discussed, many terms are used to describe how economics works in the real world. These terms will be defined so that they will be understood throughout the discussion of the economy and market demand. Today, cell phones, DVDs, digital cameras, high-speed Internet connections, and iPods are found in many households. Some of these products have greatly affected the way the economy works. Electronic communications and computer-based technologies have changed many businesses on dealing with clients and suppliers and the way they make their products or market them. The world is changing around us and not just with new technology or products but with people’s ideas, interests, or expectations. The iPod is a trend that is rapidly expanding and changing music consumption patterns. In this paper, terminology associated with economics and the iPod consumption patterns is presented.

Terminology

To help us understand the concept of economics, terms are defined and used to describe the economy and market demand. The terms break down the analysis of economics so we can better understand the direction our economy is going.

Economics

Economics is the study of how goods and services are produced, distributed, and used. The three central problems of economics are how many dollars to spend or how much to save, how much time to devote and resources to use to produce goods and services, and how to vote and shape the role of government in the world. Economics is used in almost all aspects of life and is about choice and decision making.

Microeconomics

Colander (2004) defines microeconomics, “as the study of individual choice, and how that choice is influenced by economic forces” (p.14). Microeconomics is the branch of economics that studies the economy of consumers or households or individual firms.

Law of Supply

Supply represents how much the market can offer. An increase in supply leads to a decreased price, while a decrease in supply leads to an increased price. The law of supply shows the quantities that will be sold at a certain price. The supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Manufacturers supply more at a higher price because selling a higher quantity at higher price increases revenue.

Law of Demand

Demand refers to how much quantity of a product or service is desired by buyers. It is depicted as an inverse relation of quantity and price. The higher the prices of a good, the less people want or demand the good. The lower the price, the more the good is in demand. The demand relationship shows the curve is a downward slope.

Factors that lead to Change in Supply and Demand

Individual factors that may change the demand curve are price, information, income, and price of related goods. The market demand would apply to everyone and what everyone demands. Factors that change the supply curve include laborer wages, operating prices, supply costs, the cost of land, and production technology. A change in any of these factors will shift the supply or demand curve.

iPods in Consumption Patterns

We live in a world that is equipped with about 70 million iPods. The iPod is an advanced electronic product that was developed by Apple through time to replace the vinyl records, the 8-tracks and cassettes, the CDs, and lastly the Walkman. These devices are now changing music consumption patterns. The iPod or MP3 player is a personalized