The Laws of Supply and Demand Term Paper by Nicky

The Laws of Supply and Demand
An overview of the laws of supply and demand.
# 148774 | 770 words | 2 sources | APA | 2011 | US
Published on Nov 05, 2011 in Economics (General)


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Description:

The paper explains that as the price of a good or service decreases, the level of demand for that good or service increases. The paper looks at the factors that shift the supply curve inward or outward and also points out that demand for some goods is more responsive to changes in prices than other goods.

From the Paper:

"In general, the basic principle of the law of demand is as follows: as the price of a good or service decreases, the level of demand for that good or service increases. In other words, someone thinking of buying a new pair of boots may hesitate or not be able to afford $150 for a pair of Uggs. But if the price of the boots decreases to $75, more people will be able to afford the boots, and purchasing them will seem more attractive. The opportunity cost for purchasing the item will be lower: now someone's entire clothing budget will not be sacrificed for the Uggs. Conversely, if the price increases to $200, demand will decrease as some people will not be able to afford them and others can find better uses for the extra $50 they now cost. "People will naturally avoid buying a product that will force them to forgo the consumption of something else they value more" (Economics basics, 2009, Investopedia). There are some exceptions to this principle, of course--for some luxury items, added cost can give added appeal, such as in the case of a trendy Coach purse or sports car. Also, the law of demand only holds true if all other factors remain equal. For example, in today's current recession, the prices of goods have been going down in many areas, but because people have less disposable income if they have lost their jobs, even $75 may seem like far too much. The opportunity cost of $75 now seems greater."

Sample of Sources Used:

  • Economics basics: supply and demand. (2009). Investopedia.Retrieved May 20, 2009 http://www.investopedia.com/university/economics/economics3.asp
  • The market system. (2009). Biz/EdRetrieved May 20, 2009 http://www.bized.co.uk/learn/economics/markets/mechanism/interactive/part1.htm

Cite this Term Paper:

APA Format

The Laws of Supply and Demand (2011, November 05) Retrieved February 26, 2024, from https://www.academon.com/term-paper/the-laws-of-supply-and-demand-148774/

MLA Format

"The Laws of Supply and Demand" 05 November 2011. Web. 26 February. 2024. <https://www.academon.com/term-paper/the-laws-of-supply-and-demand-148774/>

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