Mrs. Acres Home Made Pies

Topics: Supply and demand, Market economy, Economic equilibrium Pages: 4 (1190 words) Published: January 28, 2011
Assignment #1 Economics and Ethical issues

Mrs. Acres Homemade Pies (pg.30) and using the economic concepts of supply and demand, explain Discuss what you think will happen to the supply, demand and price of the product in the short-term Because supply and demand play such a central role in our economy, it's important to understand how they operate - and how you can use them to analyze decisions about price and quantity. The Law of Demand can be viewed as demand, in economic terms, shows how much of a product consumers are willing to purchase, at different price points, during a certain time period. After all, we all have limited resources, and we all have to decide what we're willing and able to produce - and at what price. While demand explains the consumer side of purchasing decisions, supply relates to the producer's desire to make a profit. A supply schedule shows the amount of product that suppliers are willing and able to produce and make available to the market, at specific price points, during a certain time period. In short, it shows us the quantities that suppliers are willing to offer at various prices. This happens because suppliers tend to have different costs of production. At a low price, only the most efficient producers can make a profit, so only they produce. At a high price, even high cost producers can make a profit, so everyone produces (McGraw-Hill, 2009, a Challenge Business world, pg. 30). .

In short term as we can see the demand is high, but the supply is not able to meet the demands. I believe that Shelly has to make a quick, but sound decision on the fate of the company. Discuss what you think will happen to the supply, demand and price of the product in the long-term. To determine the price and quantity of goods in the market, we need to find the price point where consumer demand equals the amount that suppliers are willing to supply. This is called the market "equilibrium. Long term Shelly has to...
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