Humans will want things but they are unable to get everything that they want. Therefore, to minimise the wants which they cannot get, they use the concept of demand and supply. Where some people try to produce more supply even though they do not want the supply of the good as they might want the money earned from that good. So people realise that producing something which they do not necessarily want, they still get the money which they want.
Without our ancestors who founded out the importance of demand and supply, we might still all be squatting down near a river or a forest trying to catch a fish or trying to light a fire with stones. You maybe asking me, 'How does demand and supply in Economics got to do with how we are now? Isn't it all done by scientific technology?' Yes, it is all done by scientific technology but, why would people want to have scientific technology? It is because of the wants for technology which becomes the demand for technology and also having to meet the demand, there must be supply. More people would also want to work to get money which was also found out long time ago which is also one of the main factors of Economics.
The concept of demand and supply also occurs daily in our lives. Take for example our school canteen. Almost every break, there would be a lot people in the canteen might it be students, teachers or even visitors and they are feeling hungry and they want to get something to eat, and the supply of food in the canteen might not be enough to meet the excessive demand of the people. Therefore, the prices of the food and drinks will rise to discourage some people to buy their food and drinks.
One to two years back, when i still had the crave for Macdonald's ice-cream cone, i bought it almost every week and it was so delicious and it was so cheap therefore the demand was very high. After a year or two, the price of Macdonald's ice-cream cone went up by 50%! It made me very angry and discouraged and therefore, from then on, i did not buy itvery frequently. It shows us that the use of demand and supply comes in and it was successful as it discouraged some people to buy and therefore lowering down the excessive demand to having an equilibrum with supply.
Therefore again, i feel that demand and supply is very important in our lives and we should not forget about how we can improve on our world's Economy to make it a better place for us to live.
Low Quan De
5V
I agree with some of the points that Quan De has made in his post. He says that the idea of demand and supply is a key factor in economics. I also believe that demand and supply is the foundation of what economics really is. As Quan De says, many of the components relate back to the idea of demand and supply, making it the foundation of economics. His example of MacDonalds is also good. Due to recession, many find the prices of goods increase. Therefore many can understand the idea of not buying as much ice-cream because of the increase in price.
ReplyDeleteHowever i do disagree in some areas of Quan De's post.If you produce something that is not wanted, how is anybody able to get any revenue. If there is no demand for a good and still prices are increased, there would definitely be a drop in demand. In a PPC, if the price of a product increases, the quantity demand of the product would decrease. Therefore, if the prodct's demand decreases, there will definitely be no income from that particular product, ceteris paribus. In addition, how does one demand for scientific technology? I believe that it is more technology that leads to the idea of scientific technology. Therefore it is rather weird to write that there is a demand for scientific technology. Also, in the example given of the school canteen, I do not understand how one should raise prices when the demand is high. The rise in prices will only lead to the fall in demand, ceteris paribus. If there is a higher demand in food at the canteen, prices should fall so that more people will buy and revenue would increase.
When demand is high, the equilibrium will be such that price will be higher and we will be covering the topic this week or so. I was thinking when I read your example on McDonald's -was it really the price that deters you, or your dissatisfaction with the extent to which they raised prices. As much as we believe our choices are impersonal in the marketplace and based on rational decision, behavioural economics states that sometimes decisions are governed by emotions too!
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