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Scarcity is a term that means, the people want more than the availability. Scarcity is a limit to both the individuals and the nation at large. As an individual limited time and income hinders one from engaging and having everything they would desire while as a nation, limited resources such as machines fixes a maximum on the amount of production. Scarcity always calls for a choice and as a nation or an individual we must settle on something that will satisfy our needs first. When scarcity and choice occurs, there is an increment of prices or increase in the cost of production leading to appreciation in monetary worth of goods (Ricardo, 2008). The appreciation in the monetary worth carries with it a demerit impact on the economy. The impact is considered in terms of minimizing employment opportunities and the regular use of the opportunity cost by individuals.
In the United States, the federal budget has become a powerful political issue, the deficits keep on rising and the economic melt down of previous years has led to a spike loaning, as most tax revenues depreciated and the government stepped up spur spending (Ricardo, 2008). Researchers have noted that, the current financial sector in this nation contributes to approximately twenty percent of national output, with the producing section contributing to approximately ten percent. The U.S national economy has become gradually more dependent on imports of goods and foreign capital that has not been utilized for productive investment but instead have assisted to sustain extra mass consumption and high government spending. This suggests that, the problems related to business decisions can only be solved by the U.S government considering their most basic needs and maximizing the available resources (Ricardo, 2008).
Identify market equilibrium and apply the concepts of supply and demand changes related to the price of gas.
Demand in the economic concept displays how much of a good or a service the consumers are willing and able to buy, at distinct price points within a particular time period. As everybody has some limited resources, they at one time forced to make a decision on what they are willing and able to buy and also at what price. For example let’s take an illustrative of the gasoline market, if the cost of gas is two dollars per liter, a number of people can be willing and able to buy like fifty liters per week on average. If by any chance the price depreciates to $ 1.75 per litter, some people might be able to purchase around sixty litters. With the price dropping to $ 1.50 per litter, consumers may be prepared to buy around seventy five litters. As the gas price depreciates everybody may decide to make more alternatives trips during weekends or holidays (Gilmore, 1999).
|Buyer Demand per Consumer|
|Price per liter||Quantity (liters)
demanded per week
The above schedule, and possibly the consumer’s experience, displays the law of demand that is as the price depreciates the resultant quantity demanded have a propensity to appreciate. Since any price is a barrier, the higher the price of a commodity, the lesser the demand. When the price depreciates the demand appreciates. This suggests that there is an inverse association between price and quantity demanded (Gilmore, 1999).
On the other hand as the demand describes the consumer side of buying decisions, the supply relates to the manufacturers desire to make a reasonable profit. The supply schedule displays the amount of commodity that suppliers are willing and able to manufacture and make access to the market, at a given price points, within a specific time period. In brief, it exhibits the quantities that the suppliers are willing to provide at a range of prices (Gilmore, 1999). This occurs due to the fact that, the suppliers tend to have distinct costs of production. For instance at a minimal price, only the excellent proficient manufacturers can make a profit, and so only they can manufacture. In a situation of a high price, even the highest cost manufacturers can make a profit and so everyone can produce. By using our gasoline illustration, we find that several oil companies are much willing and able to supply definite amount of gas at firm prices.
|Gas Supply per Consumer|
|Price per liter||Quantity (liters)
supplied per week
With a very low price of $ 1.20 per litter, the suppliers are willing to offer only fifty litters per customer per week. If the customers are willing to pay around $ 2.15 per litter the suppliers can offer one hundred and twenty litters per week. This suggests that, as prices appreciate, the quantity supplied also appreciate.............
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