The effect that demand has on price is often easy to see. If a lot of buyers are competing for a resource that is in short supply it has the effect of pushing up the price of this resource. When we talk about price elasticity of demand we are looking at the way that prices reach in regards to demand.
The idea of consumer equilibrium can sometimes seem a bit confusing upon first hearing. This is often because it has been explained in a complicated manner. The reality is that consumer equilibrium does not need to be such a complex concept. Hopefully by the end of this article you will have a much better idea about what is meant.
Microeconomics is focused on the micro level of the economy – the individual parts that influence the economy such as supply and demand as well as competition. A study of microeconomics can help people have a much better understanding of the world around them. For those who are interested in learning more about this fascinating subject there are some great books to help them do this. Below is a selection of some works that may be of interest; although this is in no way claims to cover all the worthy books on this subject.
An important idea in economic theory is economies of scale. If it wasn’t for the existence of this phenomena it is doubtful that the world economy would look anything like it does today. The reason large companies and multinationals exist is because they take advantage of economy of scale.
In any economy, one thing is certain: the beginner investor is alive and well. In boom economies, this investor is filled with rampant enthusiasm and a desire to strike while the market is “hot” in order to get the maximum value possible. In recessionary economies, the beginner investor is still filled with rampant enthusiasm, albeit from a much different perspective. They are looking to come into the market while it’s down and make out like thieves in the night when it rises again. Perfect prediction is outside the capability of any human-created system, but the system of technical analysis allows us to come pretty close.
Law of Diminishing Marginal Utility
Q – quantity of good
TU – total utility
MU – marginal utility (ΔTU)