**There is only one chapter in Module 2 based on the importance of its contents.
Please make use of all supplements in this module so you can understand the
concepts.
Chapter 4 (Supply and Demand) serves as the foundation for the rest of this
course. If you can fully understand the concepts in this chapter you will have an
easier time with the material in the future. Supply, Demand, and market analysis
are what economics is all about! While these are very intuitive concepts and are
not difficult they are new to most of you and will require you to think about their
formulation. I do not like to use the word memorize especially with economics but
there are two case scenarios that affect the supply and demand curves. It is critical
you understand these two scenarios between how price affects the curves and how
other factors shift them. I highly recommend that you take advantage of ALL of
the supplemental assignments to help with your understanding of these concepts.
It is imperative you understand the difference between a 1) change in quantity
demanded (a movement along a fixed curve, see figure 1 caused only by a
change in price) and, 2) a change in demand (a movement of the entire curve,
see figures 3 & 4 caused by a variety of factors but never price). The same rules
apply to the supply curve as well.
Assignment: From any reputable source, find one article discussing any element
of supply, demand or a price alteration. I want you to connect these very important
concepts to the real-world. Trust me; you will have no problem finding an article
discussing these issues. Once finding the article, jot down a brief of what is
occurring in this market, DO NOT GIVE AN ANSWER,
You do not need have articles that “explicitly” state the exact price and quantity of
crude oil being imported each month, these articles and topics can be completely
generic! I just want you to practice your critical thinking and your ability to tie
these very important concepts to the real world. All of these items can refer to
generic concepts we discuss in Chapter 4.
For instance suppose you found an article that the textbook you are using is going
to be fully customized for the sole use of Troy University students. What happens
to the demand for the customized text if enrollment increases 25% for Troy
Online? Very simple, you can even graph this to ensure your thinking is correct. A
graph is not necessary in the discussion board but feel free to incorporate one if
you are so inclined.
In economics, a picture is worth a thousand words. It should make sense that when
demand shifts to the right (see Table 1) because there are more students there will
be upward pressure on price in order to entice the supplier to supply more, is that
the case with your text? Yep! [Graph this for yourself, noting a generic supply
and demand curve, see key graph 8, when demand increases (it shifts to the right,
due to a rise in the number of buyers, this puts upward pressure on price so
suppliers will be enticed to supply more texts to meet the rise in demand)
Example 2: I was visiting some friends at Lake Martin, AL this past summer and it
really was somewhat secluded where we staying. There are restaurants in the
vicinity but not too many “grocery stores” of sorts. We went to a local fresh
market to get some items to cook for dinner. As an economist and a person who
loves to cook, I was in heaven with this little fresh market. However, what did I
note? Well, I knew they were catering to a particular niche of customers in
addition, pretty much had monopoly power on the ‘grocery store element’ (you
typically can’t get steaks at a convenience store). As I suspected the prices were
considerably higher but consumers were still shopping. A concept termed:
elasticity, which you will analyze in Chapter 5 but people are willing and able to
pay for a product versus going without it. These prices would not be as well
received or likely charged if there were 2-3 competitors within a few miles range.
However, the firms knows this and are able to make a profit by charging higher
prices, because they are getting less foot traffic than a typical large grocery store
in a more populated area. Both market participants are happy. And if the consumer
is not-he/she doesn’t make a purchase. Markets are efficient and impersonal, don’t
forget that. As well, firms are not in the benevolence business. They operate to
make a profit just like consumers operate to save money and have their needs &
wants met with a purchase.
You can give personal examples such as this as long as they are connected to
supply & demand.
Have a great week!
LB
*Make sure to cite any sources you use AND if your concept has already been covered,
you will need to find another, no duplication on this discussion.
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