Purchase Solution

Supply and Demand's Significance in Micro/Macro Economics

Not what you're looking for?

Ask Custom Question

Describe the significance of supply and demand
* To a Small business owner
* To the executive management of a large bank
* To state and federal legislators and elected leaders.

How are supply and demand viewed differently fromt he macroeconomic viewpoint as opposed to the microeconomic viewpoint?

Purchase this Solution

Solution Preview

First we define what supply and demand is.

Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium . Generally, when demand exceeds supply prices of a particular item or service are generally higher and when supply exceeds demand, prices of a particular item or service are lower. (definition from wikipedia)

Now that the definition is clear, we look at supply and demand for each of the three parties.

Small business owner

In economics, we say that small business owners are price takers. This means that they have to accept the market price. Consider this example, if a ...

Purchase this Solution

Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.