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Essay / Research Paper Abstract
This 3 page paper explains the law of supply and demand, the concept of scarcity and the concept of choice. The essay then explains the interaction and how scarcity and choice affect supply and demand. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: MM12_PGspdms.rtf
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Unformatted sample text from the term paper:
If there is a balance between the supply, i.e., the availability of the product, and the demand, i.e., how much of the product consumers want, then the price for the
product would be considered correct or appropriate. If there is an imbalance, the price will change. When a product is in short supply and there is significant demand for
the product, the price will increase (Wikipedia, 2005). When the quantity of the product is greater than the demand, the price will decrease (Wikipedia, 2005). This assumes there are
buyers willing and able to pay the higher price (Wikipedia, 2005). This assumes a competitive marketplace (Wikipedia, 2005). This process of price variability based on the supply of a good
and the demand for it will continue until a balance is once again reached (Wikipedia, 2005). At that point, an equilibrium is said to be established between the supply and
the demand (Wikipedia, 2005). Kirzner (2000) commented: "The theory of supply and demand is recognized almost universally as the first step toward understanding how market prices are determined." Furthermore, this
theory also explains how the price of a product shapes production and consumption decisions (Kirzner, 2000). These decisions are the foundation for the economic system (Kirzner, 2000). Scarcity means there
is less of something than is demanded or wanted (Investopedia Inc., 2005). What is scarce doesnt matter; it could be money, goods, time, happiness, skills or whatever (Investopedia Inc., 2005;
Wikipedia, 2005). For a nation, for example, scarcity may refer to natural resources, technology, labor, etc. (Investopedia Inc., 2005). Resources are always limited in one way or another, therefore, individuals,
companies, nations and so on must made decisions related what is perceived as scarce (Investopedia Inc., 2005). Choice is the decisions mentioned in the preceding paragraph. Choice may involve a
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