Demand and Supply-Gurjeitpahl (5Z)

It is feared by the entire world population that this recession is going to be the worst one to have ever hit Wall Street. Shocking news about businesses, companies, major firms and industries closing down or going into bankruptcy have made the headlines. Seeing words such as plunging, crashing, collapsing, bankruptcy, and job slashes has sure made us all very fearful of a tumultous time ahead. This brings me to my posting on Demand and Supply and how the recession has affected this crucial part of Economics.

One of the most pressing issues about the recession is the massive unemployment. People are losing jobs on such a big scale that a good fraction of them are left with absolutely nothing apart from the clothes on their backs. It is expected that 99,000 people in Singapore itself will either be retrenched or suffer a cut in their wages. Because people have less income now, they have been forced to watch their expenditures at all times.

Demand is defined as the willingness and ability to purchase a good or service. Because people's income levels have declined, the demand for many things has gone down. One such example is the decline in demand for holiday tours to other continents. At the recent NATAS fair, we realised that along with us, others in search for a break amidst this tension had opted for short trips within Asia and that too on Budget airlines. This is because we cannot afford to fork out too much money on holidays- a luxury, nor can we make our getaways too long because the longer they spend in a foreign country, the more we have to take out on food, accomodation, and transport etc. This will also set the demand for these to decline.

Supply is defined as the ability and willingness to produce a good or service. The Law of Supply states that as the price of a product increases, the quantity supplied of the product increases, ceteris paribus. With reference to the preceeding example and obeying the Law Of Demand, when people can no longer afford to pay the high prices of the expensive airlines, the quantity supplied will decrease. This will cause them to earn less profits. The possible result of companies not earning well is that they run into debt, or if it's more serious, they go into bankruptcy.

Amidst the recession, interestingly the Food&Beverage (F&B) Industry is both being affected in the good way and in the bad. Why I say this is because food is a necessity. The demand for fancy restaurants has plunged because dining in at a posh place has become inaffordable for many. Thus, as restaurants are becoming increasingly deserted, they're lack of profit earned cannot compensate for their expenses. Thus, fancy dining has been dished away to a far extent. On the other hand, people's demand for economy meals has increased. They are becoming happier about the fact on reducing the amount spent on each meal as they have to spend on this everyday. I'm sure there are many other families just like mine which just prefer to have home food.

I feel that the recession has completely upset the whole economy because in demand and supply alone, there have been so many changes and at the moment, there is no light visible at the end of the tunnel for businesses, companies, firms and industries alike.