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Egt1 Task 1 - Wgu

In: English and Literature

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Supply and Demand One of the most critical concepts in the study of economy and the way our world works is: supply and demand. This essentially helps use understand markets and the way we consume the things we need and want on a daily basis. Supply and demand concepts have application in everyday life and in business. Essentially supply and demand are determined separately, the sellers determine the supply and the buyers determine the demand. The price of the product or service offered is never really fixed until equilibrium is reached. Another words the product or service offered must equal the amount demanded. This concept has a direct impact on consumers in the daily decisions he or she will make. However many variables within supply and demand still exists. With all the variations of products and services offered what makes consumers pick one product or service over another? In the following paragraphs you should have a better understanding of what drives decisions that are vital to the market in an economy. In economics, elasticity is the measurement of how changing one economic variable affects others. Elasticity extends our understanding of markets by letting us know the degree to which changes in price and income affect supply and demand. Sometimes the responses are substantial, other times minimal or even non-existent. But by knowing what to expect, businesses and government can do a better job deciding what to produce, how much to charge, and, surprisingly what items to tax (McConnell, Brue & Flynn, p.75). A great example of elasticity can be found in everyday shopping experiences as we shop at our local grocer for the best price per pound on a particular produce. Price elasticity of demand measures the extent of movement products or services take along the demand curve. Consumers often need time to adjust to changes in prices…...

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