Apply Supply and Demand
Okay so after my first day in Microeconomics, we learned the basics. The Law of Supply, The Law of Demand, Scarcity Rule and The "Thoery" of Equilibrium. A quick refreshed for those reading who haven't hit an ECN class in a while.
The Law of Demand is all about the consumer... They make demands, oh yes we do. When Price goes UP, the Quantity we buy goes DOWN and vice versa. Thats because consumers enjoy low prices! Easy enough. If a pair of socks cost $0.10 I might actually buy new socks. If they cost $0.02 I might buy 2 pairs!
The Law of Supply is producer (seller) sided. When Price goes UP, Quanitity follow suit and goes UP. Since producers like to make money they want to sell more if the price is high. More Goods and A higher price means more money!
Scarcity is what keeps this all in context. There are limits to everything. Limits to land, labor, capital and entreprenuership. Capital meaning equiptment, not cash, cash is paper. Equiptment like machines, pens, paper, so okay maybe cash is capital in this sense. The last and upcoming factor of scarcity would be information, that is left for another debate.
The Law of Demand is all about the consumer... They make demands, oh yes we do. When Price goes UP, the Quantity we buy goes DOWN and vice versa. Thats because consumers enjoy low prices! Easy enough. If a pair of socks cost $0.10 I might actually buy new socks. If they cost $0.02 I might buy 2 pairs!
The Law of Supply is producer (seller) sided. When Price goes UP, Quanitity follow suit and goes UP. Since producers like to make money they want to sell more if the price is high. More Goods and A higher price means more money!
Scarcity is what keeps this all in context. There are limits to everything. Limits to land, labor, capital and entreprenuership. Capital meaning equiptment, not cash, cash is paper. Equiptment like machines, pens, paper, so okay maybe cash is capital in this sense. The last and upcoming factor of scarcity would be information, that is left for another debate.
