our wants are virtually unlimited, while the resources available to satisfy these wants are limited. In other words when society demands more of a product than can actually be produced to fulfil those wants we have a problem of scarcity. An example of this would be the OPEC oil price shocks between 1973 and 1980. Yes, it is true that the price of oil rose and some individuals used substitutes but the economies of oil importing countries like Germany and Japan fell because OPEC now had more buying power since they had the control over a scarce resource. We can therefore think of oil as having become scarcer in economic terms when its price rose.Earlier I stated that economics is concerned with consumption and production. We can look at it in the terms of demand and supply. It is simply the quantity of a good buyers wish to purchase at each conceivable price. Three factors determine demand:DesireWillingness to payAbility to payWhilst supply is the quantity of good sellers wish to sell at each conceivable price. Supply is related to resources. The amount that firms can supply depends on the resources and technology available. The Laws of Demand and Supply states:As the price of goods and services increases, producers may offer more goods and services.As the price of goods and services decreases, producers may offer less goods and services.As the price of goods and services increases, buyers may demand less goods and services.As the price of goods and services decreases, buyers may demand more goods and services.Economics is not just about money as you can see but it also uses resource, scarcity, and mankind’s basic desires the demand for a certain product or service and the supply by a manufacturer or person of this desired good or service. Economics also studies how demand adjusts to available supplies and how supply adjust to consumer demands....
