Supply and Demand Simulation Amanda Huenefeld ECO/365 Sadu Shetty January, 14, 2013 Introduction Supply and demand are the two influences that govern pricing in the larger picture of a viable economic market. The two factors are like two forces. Equally the conclusive levels of supply and demand, and the comparative levels of the two in contrast to one another, are significant. The standard of supply and demand is that if one or both varies, there will be a transient difference in the amount of product manufacturers are equipped to sell and the quantity that consumers are willing to buy. This difference will cause the market price to increase or decrease when necessary until the quantities are the same.
The price of all goods and services depends largely on supply and demand. Individualism and competition are essential to capitalism. Individual success is valued and people are encouraged to pursue personal wealth, often through higher education or by starting a business. Competition is also stressed as a way of increasing personal success and wealth. Capitalism relies on competition for resources and a system of checks and balances.
Governments may choose to increase minimum wage on an arbitrary basis, making it difficult for companies to hire individuals at a consistent market rate. Government price controls distort the economic theory of supply and demand. Supply and demand is a significant underlying feature of free-market economies. This theory allows individuals and businesses to make decisions based on self-interest. Businesses often pay individuals a wage based on current market standards.
Economies were created through trading and bartering, mostly through social circles and relationships. Taxes and custom duties were created so that trade could be controlled to protect their economy. Two dominant economic systems exist throughout the world. They are capitalism and socialism. “Capitalism is an economic and social system in which capital and the non-labor factors of production or the means of production are privately controlled; labor, goods and capital are traded in markets; profits are taken by owners or invested in technologies and industries; and wages are paid to labor” (wikibooks.org).
GDP has been a common indicator to compare how a country has been faring overall. However, there are many problems associated with GDP as a measure of comparison which may undermine its importance. In every economy, there are some transactions that go unrecorded. This is because of the activities informal nature. This is especially true in developing nations since many of its activities are traded without the exchange of money.
Differentiating between the market structures of this business will allow for explanations of how different sectors of industry will vary and how to come up with some competitive strategies to grow the business within the industry. Market Structure Target is within the oligopoly market structure. Oligopoly, according to Colander (2013), a market structure in which there are only a few firms and firms explicitly take other firms’ likely response into account. Being that there are only a few different businesses like Target, they tend to set their prices according to the rivals. This practice keeps these businesses in the oligopoly market structure.
Global groupings are nations with similar aims of economic and social development. Global Groupings can be separated into political (trading blocs of nation for security in trading) and economic grouping. Nations can be categorised according to their overall levels of wealth and power that it brings Economic grouping is based on economic stages of a nation. However in the past countries have usually been classified in a two – tier system as MEDC’s and LEDC’s. LDC(least developed countries) in this group have very low income with a low GDP per capita; they have sometimes been described as ‘Fourth World’ nations to emphasise their bleak conditions and their populations lack of engagement with globalising forces.
One thing we can be sure of is that a business cycle affects different sectors of our community in different ways. Gross domestic product is a great measure of an economies growth. The chair of the Federal Reserve uses information gathered from GDP to assist with making necessary adjustments to keep a balance between inflation and unemployment.
The Federal Reserve has the ability to create many avenues of economic power with just a minimal amount of resources, however; these minimal amounts of resources are very powerful. In the upcoming reading
It is also a part of the simple circular flow model. Consumption is the largest factor in the gross domestic product. Many economists base the economic growth of their countries on consumption. The article in the Wall Street Journal, Consumption to Remain Restrained, Says Kruger, by Sudeep Reddy, gives definition to a few of the economic terms studied in this class. The article clearly defines consumption, consumers, and other key terms, that pertain to the economy.