Econ Ch. 6

Chapter 6 Focuses supply and demand policies. This chapter highlights the reasons between price ceiling and price floor. Price ceiling is the legal maximum price something can be and price floor is the legal minimum of how cheap something can be. Price ceiling and Price floor are regulated by the government to "fix" market outcomes. Having price ceiling and price floor is the governments way of helping the economy. Minimum wage and rent control are factors of the government regulating these outcomes. For example, rent control controls how much a house owner can charge his tenants. By imposing a maximum price the government allows people who are lower in society (poor) to have the availability to rent a house. This can be controversial because lower  rents can cause more people to move into the city. Having minimum wage laws is also controversial because they can cause certain groups of people to fall under the poverty line. Certain minimum wage levels can also cause higher drop out rates amongst teenaged students.

Econ Ch 5 Blog

Elasticity and its application

Chapter five highlights what the price of elasticity of demands is.  demand for a good is said to be elastic if the quantity demanded responds SUBSTANTIALLY to the change in price. Demand for a good is said to be inelastic if the quantity  demanded responds only SLIGHTLY to the change in price. In other words, this is how economists analyze a buyers willingness to purchase or avoid a product. There are many factors that determine the price elasticity of demand such as the availability of substitutes which makes it easier to switch one good for another. This means that if one product has a higher price then the buyers are more likely to buy a similar(substitute) product for a lower price. Another factor is Necessities and Luxuries. Necessities have inelastic demands means that the demand changes only slightly and luxuries have inelastic demands due the the fact that if money is short, the luxury will be avoided. The TYPES of markets are also factors the demand elasticity and inelasticity. For example markets with a more broad demand are inelastic because of the broad variety of substitutes whereas narrow and more specific markets have easier to find substitutes. Time is a major factor to the elasticity of a demand. When looking at gasoline prices people have a negative relationship. Over time people switch to more fuel efficient cars of switch to public transportation. At the beginning people  react positively to the change in price, at first people buy the gasoline and after a certain time period they decide to change methods.

Chapter four for economics primarily focuses on the supply and demand situation within the economy.  Supply and demand goes hand in hand with how the economy turns out to be but they are both dependent on each other. Demand is the amount of product that the consumers have demanded whereas supply is the amount of product that is available by the supplier. Depending on both of these results they yield what the monetary value of products will be. For example if there is more people who want a certain computer than the supplier can give, then the supplier will increase the price because its more desired and demanded. Due to the number of customers that the supplier will lose, the supplier must increase the price to get even or make a certain profit. There are a lot of things that can affect both of these factors of supply and demand. For example, in order for the demand curve to change that would depend on income, number of buyers and external factors that depend on the consumers . For the supply curve to change, most of the factors that change it are internal factors within the firms such as the amount of products available and other firms with the same product within the market. Supply and demand goes hand in hand to make our economy go round.