Law of Demand

Topics: Scarcity, Economics, Resource Pages: 1 (320 words) Published: November 10, 2008
The economic perspective: the economic perspective includes scarcity and choice, rational behavior and marginalism. Scarcity and choice in summary states that human and property resources are not limited the goods and services must also be limited. Our book states that we must decide what we will have and what we will forgo. I consider that scarcity and choice is significant because essentially economics is based on satisfying wants with efficient use of these scarce resources. Rational behavior means that decisions will vary from person to person, so what one person may see as important may or may not be important to another. Marginalism means that in order to gain the benefit of one option another option must be forgone. The economic perspective can be used in my workplace with the use of titanium. Titanium is a scarce resource mainly found in Russia. Titanium is important in the aerospace industry because titanium light weight and extremely strong. Boeing tries to secure long-term contracts with the Russians to prevent shortages and price increases. Boeing also uses leverage of large buying power to ask the Russians to not sell to other industries because of the scarcity of the resources.

Law of Demand: demand is a schedule or curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period. The law of demand basically states as price falls the demand rises and has the price raises the demand falls. Other factors to pay a part in the price such as competition, the amount purchased can be a factor in price and if income changes this can also affect the amounts purchased. According to the reading, the law of demand is consistent with common sense. People ordinarily do buy more of a product at a low price than they will when the price is high.
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