Economics Most Particularly, I Discuss the Economic Essay

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Economics

Most particularly, I discuss the economic concept of demand and supply and the determinants of both supply and demand. Further, I also discuss in significant detail the meaning of economic indicators as well as monetary and fiscal policy.

Demand and Supply

Supply and demand are considered some of economics' most fundamental concepts. Indeed, they underlie almost every transaction in a market economy. In basic terms, demand according to Boyes and Melvin (2012), is "the amount of a product that people are willing and able to purchase at each possible price during a given period of time…" On the other hand, supply as Boyes and Melvin (2012) point out can be described as "the amount of a good or service that producers are willing and able to offer for sale at each possible price during a period of time…" It is the interrelation between these two important economic concepts that brings about the efficient allocation of resources. With that in mind, it would be prudent to come up with a concise definition of the law of demand as well as the law of supply.

The law of demand according to Boyes and Melvin (2012) points out that "the quantity of a well-defined good or service that people are willing and able to purchase during a particular period of time decreases as the price of that good or service rises…" The reverse is true. This essentially means that people are more likely to avoid purchasing a given good or service when the opportunity cost of purchasing the same is driven up by escalating prices.

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On the other hand, the law of supply in the opinion of Boyes and Melvin (2012) points out that "the quantity of a well-defined good or service that producers are willing and able to offer for sale during a particular period of time increases as the price of the good or service increases…" In this case, the reverse is also true. One of the main reasons why producers of goods and services tend to pump more of their goods into the marketplace when the prices of the same are higher is because the high prices in this case enable them to rake in more revenues. The amount of goods buyers demand is determined by several factors which include but are not limited to the disposable income of buyers as well as their tastes, the prices of other goods that are related to the goods in question and future expectations regarding the price or scarcity of the goods in question (Boyes and Melvin 2012). The amount of a particular good supplied in a given market can also be determined by a number of things. These include but they are not limited to the prices of other goods that are related to the goods in question, the actual number of suppliers in the….....

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