University of Phoenix
March 2, 2009
The following paper will define economics, microeconomics, and the law of supply and demand. The paper will identify the factors leading to a change in supply and a change in demand, and will also analyze the basis for the trends in consumption patterns discussed in the article “As US Shoppers Retreat, Can World Thrive?” The author of the paper will analyze the article by considering the utility derived from the products mentioned in the mentioned article, and will describe what has occurred to change the demand for, or the supply of, the good or service. The paper will ...view middle of the document...
Law of Supply and Demand
The definition of the law of supply is the higher the price the greater will be the quantity of goods supplies. In other words, the quantity supplied is directly related to its price. Manufacturers will supply a higher quantity of goods at higher prices then at lower prices. This is a law belonging to microeconomics and states if all other factors remain constant, if the price of goods or services increases, the quantity of goods or service offered by producers’ increases.
The law of demand states when price increases, the quantity demanded falls. In other words, the quantity demanded is negatively related to price. Or, if all other factors remain constant, if the price of a product or a service increases, the consumer demand for the goods or services will decline.
The factors, which cause a change in demand, are a change in market expectation, a change in the number of buyers, a change in income, change in complementary or substitute goods and a change in fashion or tastes. Similarly, changes is supply are caused by changes in expectations of sellers, changes in technology, changes in prices of relevant inputs, changes in the number of sellers, and prices of other goods.
Trends in consumption patterns
The article, “As U.S. Shoppers Retreat, Can World Thrive?” discusses consumption patterns of Americans. Americans have been consuming freely over the years and this pattern has fueled the world economy. However, this consumption has slowed down since the American consumer is in debt. The article attempts to examine the effect this slowdown will have on the world economy. The trend in consumption the article analyzes is the falling consumption by the U.S. common people and the fact the people are using debt to purchase consumer products. For example, domestic cars, Italian suits and Taiwanese laptop computers. The products mentioned have great utility of use, and provide satisfaction the purchaser of the car is helping the U.S. economy. Moreover, using domestic cars creates a perception the person using the car is patriotic. The person who purchased this car improves the positioning of a person in the society. Italian suits satisfy the needs of a large number of Americans. The suits have a distinctive style and add to the personality of the people who wear them. The suits are useful for business executives and will make anyone who wears them look fashionable. Wearing an Italian suit makes a fashion statement for the wearer.
The last product mentioned is the Taiwanese laptop computer. They provide excellent services to all users and are priced lower than comparable to U.S. made laptop computers. The Taiwanese laptop computers have utility because every they are mobile and versatile. Users can be students, teachers, housewives, sales people and more; the list is endless. The price of the computer has greatly reduced...