Riverpoint Writer (Article Aalysis)

Topics: Supply and demand, Economics, Adam Smith Pages: 5 (1607 words) Published: October 9, 2011
Article analysis
Laura Morrison
September 26, 2011
Tarron Khemraj

Article analysis
In understanding economics first summarize what is economics. No universally definition of economics. Although it defined as the study of how individuals and groups make decisions with limited resources, coordinate their wants and desires, given the decision mechanisms, social custom, and political realities of the society. Economic are operative in aspect of lives, market forces of goods sold in a market but supply and demand also used to analyzes situation in which economic forces operate. In addition to the study of economics, coordination refers to how the three central problems facing any economy solve. These central problem are what and how much, to produce, how to produce it, and for whom to produce it.

We find economies as inevitably individuals want more than is available, given how much they are willing to work. The economic theory divided into two parts, stated that as microeconomics is the study of individual choice and how that choice is influenced economic forces, microeconomics studies things as the pricing policies of firms, households’ decisions on what to buy and how markets allocate resources among alternative ends. The invisible hand theory comes from microeconomics that states that economists call the invisible hand theory, a market economy, through the price mechanism will tend to allocate resources efficiently. Good economic policy analysis is objective; it keeps the value judgments separate from the analysis.

The distinction between objective and subjective analysis, economists has divided economic into three categories, positive economics, normative economics, and the art of economics. Positive economics is the study of what is and how the economy works, Normative economics is the study of what the goods of the economy should be, and the art of economics called the political economy is the application of the knowledge learned in positive economics to the achievement of the goals one has determined in normative economics.

To express the law of demand is to the invisible hand ability to coordinate individuals’ desires, as prices change, people change, and their willing to buy. The law of demand states the quantity demanded of a good is inversely relate to the price of those good, other thing constant. As the price of a good goes up, the quantity demanded goes down, so the demand curve is downward sloping if the price of demand goes up, people will tend to buy less of it and buy another product instead.

In addition, the law of supply corresponds to the law of demand states the law of supply, is quantity supplies rises as prices rises, other things constant or alternatively, quantity supplied falls as price falls, other things constant whereas the price determines quantity supplied just determines quantity demanded. Likewise, the law of demand, the law of supply is the market ability to coordinate individuals’ action. While the law of supply firm’s ability to switch from producing one well to another that is to substitute. The price of a good a person or firm supplies raises individuals and firms can rearrange their activities in order to supply more of that

Good to the market. As those higher profit leads to increase output as price rises, a supply curve is the graphical representation of the relationship between price and quantity supplied.

The terms that matter about supply and demand is not the label, but how the concepts interact. In which neither suppliers nor consumer collude and in which prices promote the forces of supply and demand interact to arrive at equilibrium, a concept in which opposing dynamic forces cancel each other out. Although the Equilibrium...
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