Economics
Trends
Economics “is the study of how
human beings coordinate their wants and desires, given the decision-making
mechanisms, social customs, and political realities of the society.” (Colander,
2004, pg 4) This essentially means that
when ever a person makes a choice they are considering, whether consciously or
subconsciously, the cost/benefit ratio to each alternative given. The cost/benefit ratio of a product is also
dictated by the laws of supply and the laws of demand. By analyzing the trends in consumption
patterns an economist can predict changes in supply and demand along with how
those changes will affect the price and utility of a product.
Law
of Supply and Demand
“The law of demand states that the
quantity of a good demanded is inversely related to the good’s price.”
(Colander, 2004, pg 84) As the demand
for an item increases so will the price.
If the price of items did not increase as demand increase, soon supply
of that particular item would run out.
The higher an item is price the less demand there will be and the more
consideration a person will put into purchasing that item, hence his or her
cost/benefit analysis. If a consumer
determines that they can’t afford an item, or that the money spent is not worth
the product they receive, there will be diminished demand for the product. On the other hand, if product is priced low
and consumers deem the product a want or need that they can afford, the demand
will increase.
